The long-rung production function of a competitive firm is f(L,K)= L¹/³K¹/5, where L is the amount of labor and K is the amount of capital. The cost per unit of labor is w and the cost of capital is r, which is the interest rate. The price per unit of output is p. a. What are the returns to scale of this production function? b. Find the long-run profit maximizing levels of capital and labor.

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Short-Run Costs and Long-Run Costs

Cost of short-run and the long-run is an economic term that describes the cost involved in the production of goods in a firm in the short as well as long period.