Epiphany & Co's production function is given by Q = 50VLK. Let w = 25 and r = 100 be the prices of labor and capital, sespectively. (2) Find the equation of Epiphany & Co.'s longrun average total cost curve. (b) Find the equations of Epiphany & Co.'s shortrun average total cost curve when capital is fized at R. For simplicity, assume the fixed cost is sunk (e) On a graph, draw the long-run average total cost curve and shortrun average total cost curves for R = 1 and R = 2.
Epiphany & Co's production function is given by Q = 50VLK. Let w = 25 and r = 100 be the prices of labor and capital, sespectively. (2) Find the equation of Epiphany & Co.'s longrun average total cost curve. (b) Find the equations of Epiphany & Co.'s shortrun average total cost curve when capital is fized at R. For simplicity, assume the fixed cost is sunk (e) On a graph, draw the long-run average total cost curve and shortrun average total cost curves for R = 1 and R = 2.
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.9P
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Transcribed Image Text:Epiphany & Co's production function is given by Q = 50VLK. Let w = 25 and r = 100 be the
prices of labor and capital, respectively.
(a) Find the equation of Epiphany & Co.'s longrun average total cost curve.
(b) Find the equations of Epiphany & Co.'s shortrun average total cost curve when capital is fized
at K. For simplicity, assume the fixed cost is sunk
(c) On a graph, draw the long-run average total cost curve and shortrun average total cost curves for
K = 1 and K = 2.
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