A firm's production function takes the form: Q(L, K) = min{2L, 3K), where Q represents output and L and K represent labour and capital, respectively and where w and r give the prices of labour and capital. Assuming no other costs, what would be the marginal cost if the firm increased output by 1 unit? = Q( +/+ + + / -) O MC = 3w+2r 3w+2r O MC=3w+2r OMC = + O MC=2w+3r O MC =

Microeconomic Theory
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Chapter10: Cost Functions
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A firm's production function takes the form: Q(L, K) = min{2L, 3K}, where Q represents output and L and K represent labour and capital, respectively and where w and r give the prices of labour
and capital. Assuming no other costs, what would be the marginal cost if the firm increased output by 1 unit?
O
O
MC = Q [ 12/2₁
= Q ( + 1/2 + 1/2 )
MC =
W
3r
3w+2r 3w+2r
+
O MC=3w+2r
O
W
r
= 21/1/2+1/1/3/2
O MC =2w+3r
MC=1/2
Transcribed Image Text:A firm's production function takes the form: Q(L, K) = min{2L, 3K}, where Q represents output and L and K represent labour and capital, respectively and where w and r give the prices of labour and capital. Assuming no other costs, what would be the marginal cost if the firm increased output by 1 unit? O O MC = Q [ 12/2₁ = Q ( + 1/2 + 1/2 ) MC = W 3r 3w+2r 3w+2r + O MC=3w+2r O W r = 21/1/2+1/1/3/2 O MC =2w+3r MC=1/2
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