Question
Asked Oct 17, 2019
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Question 33
Consider a firm with production function f(L,K)=3L+8K. Assume that capital is fixed at K=12. Assume also that the price of capital r=10 and the price of labor w=3. Then, the average cost of producing q units is?

AC(q)=24/q+1

AC(q)=114/q+9/8

AC(q)=24/q+3

AC(q)=88/q+1/12

AC(q)=24/q+q

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Expert Answer

Step 1

Given,

Production function f(L,K)=3L+8K

Where, K is the units of capital and L is the units of labor

Capital K = 12

Price of capital r = 10

Price of labor w = 3

When total cost (TC) divided by the numb...

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