Derive the short run cost function of the firm

Assignment Help Business Economics
Reference no: EM131165064

The production function of a typical food manufacturer has been estimated to be q = K^1/3 L^1/2 where K denotes capital and L denotes labor. In the short run, the firm’s capital is fixed at K ¯ =1000. The prices of capital and labor are fixed at r=1 and w=2 in the short run and the long run.

1. Derive the short run cost function of the firm.

2. Derive the marginal cost and average variable cost functions of the firm in the short run and represent them on a graph with price on the vertical axis.

3. Does the firm shut down at any positive output price in the short run? Explain your reasoning.

4. Derive the long run cost function of the firm using the method of your choice.

5. Derive the marginal cost and average cost functions of the firm in the long run.

6. Does the firm decide to shut down at any positive price in the long run? Explain your reasoning.

Reference no: EM131165064

Questions Cloud

Company strategy writing the plan : Models and best practices for reaching the target audience Developing recommendations to ensure alignment with company strategy Writing the plan and setting expectations Implementing the plan, proven best practices for implementing Tools for evalu..
How the flow under the sheet pile varies : Suppose there is a problem with the exit gradients. as in Problem 7-45. One solution would be to place a horizontal filter over the soil where the water exit
Determining the return on investment for scenario : If the new training program will reduce these costs to $60,000 per year, what is the maximum acceptable cost to initiate the program to reach the break-even point within three years? What is the return on investment for this scenario?
Discuss factors that affect attachment security : Discuss factors that affect attachment security (secure and insecure). Apply Bronfenbrenner's ecological model to discuss how contextual and ecological factors such as poverty, education, the environment of the home, and poor quality childcare aff..
Derive the short run cost function of the firm : The production function of a typical food manufacturer has been estimated to be q = K^1/3 L^1/2 where K denotes capital and L denotes labor. In the short run, the firm’s capital is fixed at K ¯ =1000. Derive the short run cost function of the firm. D..
Determine the exit gradient : The amount of water flowing under the sheet pile per metre of wall.
Explain importance of these facets for any and all planning : Explain the importance of these facets for any and all planning. Directly relate these facets to testing or improving the plan you have reviewed. Choose and describe at least five important stakeholders or partners with whom county EM planners should..
How many managers should an organization have : How many managers should an organization have, Give with reasons
What are the external effects : What are the external effects ( externalities ) and why they can lead to inefficiencies and government intervention in the markets. Why are some government policies to manage external effects effective ( efficient ) while others are inefficient ( ine..

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd