Determine the short-run cost equation

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Reference no: EM132551251

Questions -

Q1. Calculate the corresponding cost function, c(w, r, q).

q = (min(L,3K))^.5

q = L-1/K

Q2. Draw a representative isoquant for q = 12

Q = min(2L,(2(L+K))/3,2K)

Q3. In the consumption/leisure model, let the consumer's utility function be U(C, l) = C^.25+l^.25. Suppose P_c=$1 and w₁=$10 determine the optimal amount of C and L and the equation for the labor supply.

Q4. Suppose w₂ = $12 determine the new optimal C and L and determine the substitution and income effects of the price change of leisure.

Q5. Given the following production function q=10^.25L^.25 w=$10 and r=$40 and K=5. Determine the short-run cost equation.

At what combination of K,L,q is the short-run cost is equal to the long-run cost?

Reference no: EM132551251

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