The New Age firm produces clean coal. New Age's production function is given by q = L3S3, where L denotes la and S denotes its cutting-edge machinery. The price of labor is given by the wage, w, and price of machiner denoted pc. Suppose that in the short run number of machines is fixed at 5 = 1 while L is variable. a. Write down the expression for the short-run production function. In no more than two sentenc describe the fundamental difference between the short-run and long-run time horizons in production b. Invert the short-run production and derive variable costs, VC(q) = wL(q), where labor is a function of level of output L(q). Next derive fixed costs and the short run cost function, C(q). Compute the marginal productivity of labor (MPL) and show that MPL is diminishing, i.e. d. Compute marginal cost (MC(q) = C) and show that it is increasing, i.e., . > 0. C. амс Sa aMPL SL <0.
The New Age firm produces clean coal. New Age's production function is given by q = L3S3, where L denotes la and S denotes its cutting-edge machinery. The price of labor is given by the wage, w, and price of machiner denoted pc. Suppose that in the short run number of machines is fixed at 5 = 1 while L is variable. a. Write down the expression for the short-run production function. In no more than two sentenc describe the fundamental difference between the short-run and long-run time horizons in production b. Invert the short-run production and derive variable costs, VC(q) = wL(q), where labor is a function of level of output L(q). Next derive fixed costs and the short run cost function, C(q). Compute the marginal productivity of labor (MPL) and show that MPL is diminishing, i.e. d. Compute marginal cost (MC(q) = C) and show that it is increasing, i.e., . > 0. C. амс Sa aMPL SL <0.
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
Problem 15P
Related questions
Question
can you solve for D E F please thanking you
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 1 images
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question
for part f, how does APL equal L^(2/3)//(1/L^(1/3))? Where is the 1/3 coming from for labor?
Solution
by Bartleby Expert
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning