Let a firm’s production function be f(K,L) = min{2K,L}. a) Solve for the contingent demand functions for Kand L. b) Substitute the contingent demand functions in the total cost that you minimized in part a) to obtain the total cost function. c) Find the minimal amount of Kand Lnecessary to produce Q= 8 when v= 2 and w= 1 (with minimal possible cost). d) Suppose the price wincreases from 1 to 2. What happens to the demands for Kand Land the total cost?
Let a firm’s production function be f(K,L) = min{2K,L}. a) Solve for the contingent demand functions for Kand L. b) Substitute the contingent demand functions in the total cost that you minimized in part a) to obtain the total cost function. c) Find the minimal amount of Kand Lnecessary to produce Q= 8 when v= 2 and w= 1 (with minimal possible cost). d) Suppose the price wincreases from 1 to 2. What happens to the demands for Kand Land the total cost?
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.9P
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Let a firm’s production function be f(K,L) = min{2K,L}.
a) Solve for the contingent
b) Substitute the contingent demand functions in the total cost that you minimized in part
a) to obtain the total cost function.
c) Find the minimal amount of Kand Lnecessary to produce Q= 8 when v= 2 and
w= 1 (with minimal possible cost).
d) Suppose the price wincreases from 1 to 2. What happens to the demands for Kand
Land the total cost?
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