) Assume that the output of a company is given by y (K, L) = K^0.5 * L^0.5, where the amount of capital on short term is given by K = 1 and wage costs are given by w = 1. Calculate and illustrate them average variable costs and marginal costs (marginal costs). b) In addition, assum

Microeconomics A Contemporary Intro
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Chapter7: Production And Cost In The Firm
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a) Assume that the output of a company is given by y (K, L) = K^0.5 * L^0.5, where the amount of capital on short
term is given by K = 1 and wage costs are given by w = 1. Calculate and illustrate them
average variable costs and marginal costs (marginal costs).
b) In addition, assume that the price of capital is given by r = 1. Calculate the average totals
the costs
and illustrate using a figure where you also include the marginal cost as
you found in a). Comment on what you find.

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