A local coffee shop has the following production function of cups of coffee, ? = ?3/4?1/2. The firm currently has 1 grinder (?̅ = 1) which costs a total of $2000. In order to produce any output, the firm must hire workers, which cost $5 each.   What is the coffee shop’s short-run total cost equation as a function of Q?

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A:

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Q: production function

A: The firm produces at MRTS=w/r   MRTS=MPL/MPK =100K/100L =K/L

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A:

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A: Answer -

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Q: The short-run cost function of a company is given by the equation TC = 200 + 55q, where TC is the…

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A: Answer in step 2.

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.