Total cost function, Microeconomics

A firm's production function is given by Q = √LK . The price of labour is w and the price of capital is r.

a. The price of labour is $5 and the price of capital is $20. What is the cost minimising combination of labour and capital if the firm wants to produce 1000 units per year?

b. Derive the total cost function, as a function of Q, w and r.Substitute the values w = $5 and r = $20 into the cost function and illustrate LRTC(Q), LRAC(Q) and LRMC(Q) using a suitably labelled diagram (LR = long run). Why is the LRTC function shaped the way it is?

c. Now assume that capital is fixed at K' , derive the short run total cost function, using w = $5 and r = $20.Illustrate the SRTC(Q), SRAC(Q) and the SRMC(Q) functions using a suitably labelled diagram (SR = short run).

Posted Date: 3/30/2013 6:16:53 AM | Location : United States







Related Discussions:- Total cost function, Assignment Help, Ask Question on Total cost function, Get Answer, Expert's Help, Total cost function Discussions

Write discussion on Total cost function
Your posts are moderated
Related Questions
what is stagnation thesis?

1.A firm producing Golf sticks has a production function given by Q=2v(K L) In the short run, the firm’s amount of capital equipment is fixed at k = 100. The rental rate for k

-1- ASSIGNMENT #1 The demand function for Product X is given by: Qdx = 80- 2Px- 0.05P²x -0.2Py + 4Pz + 0.01I+ 2A Where: Px Price of good X $120.00 Py Price of related good y $100.0

Engel Curves -Engel curves relate quantity of good consumed to income. -If good is a normal good, Engel curve is sloping upward. -If good is an inferior good, the Engel c

Not sure how to graph & calculate a retail price of $30 & avg cost $20 assuming that the equation for demand is Q=10,000-9,000P, where P=retail price & Q=# sold per month.Then to s

what is oxidizing agent

Exchange Rate Policy: LERMS, a dual exchange rate system, was introduced in the Budget for 1992-93. Under this system, 40 per cent of foreign exchange earnings were to be sur

So what caused the end of Malthusian age? How did humanity escape from the trap in that invention and ingenuity increased the numbers though not the material well-being of humanity

Air is one of the important constituent in the environment that is prone to pollution. Pollution of air refers to that part of atmosphere which is very nearest to the earth’s surf

In neoclassical economics, equilibrium exists when supply equals demand for a particular commodity. General equilibrium is a special (purely hypothetical) condition in which every