A firm has the following production fundion: q =min{K, 10L). where q denotes output, K denotes capital and L denotes labor. Assume that the markets for capital and labor are competitive. In particular, the price of a unit of capital is 5 and the price of a unit of labor is 25. (a) Calculate the firm's (long-run) cost of producing 200 units of output. (b) More generally what is the (long-run) cost of producing q units of output? (The answer l expect is a particular function of q.]
A firm has the following production fundion: q =min{K, 10L). where q denotes output, K denotes capital and L denotes labor. Assume that the markets for capital and labor are competitive. In particular, the price of a unit of capital is 5 and the price of a unit of labor is 25. (a) Calculate the firm's (long-run) cost of producing 200 units of output. (b) More generally what is the (long-run) cost of producing q units of output? (The answer l expect is a particular function of q.]
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 8SQ
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Transcribed Image Text:A firm has the following production function:
q =min{K, 10L),
where q denotes output, K denotes capital and L denotes labor. Assume that the markets for capital and labor are competitive. In particular, the price of a unit of capital is 5 and
the price of a unit of labor is 25.
(a) Calculate the firm's (long-run) cost of producing 200 units of output.
(b) More generally what is the (long-run) cost of producing g units of output? (The answer I expect is a particular function of q.)
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