Cost Minimization for Cobb-Douglas, Microeconomics

Assignment Help:
3.Cost Minimization for Cobb-Douglas. Suppose the Acme Gumball Company has the produc-

tion function of q=LK. Given that the MPL=K, MPK=L and MRT S=MPL/MPK.

Part a-b, we are analyzing the impact of output on input choices.

a. Suppose wage rate is w= $5 and rental rate is r= $5. What is the cost-minimizing combina-

tion of L and K to produce 100 gumballs? How much is the cost?

b. Given the same wage and rental rate as part a. What is the cost-minimizing combination of

L and K to produce 200 gumballs? How much is the cost?

c. The production function for Acme Gumball Company exhibits _________ (increasing,

constant, or decreasing) return to scale. The total cost increases _________ (faster than, slower

than, or at the same rate as) the output increases.
Part d-e we are analyzing the impact of input prices on its choices. Suppose the firm targets to produce 100 gumballs.
d. Suppose wage rate is w=$5 and rental rate is r=$10. What is the cost-minimizing combination of L and K? How much is the total cost?
e. Suppose wage rate is w=$5 and rental rate is r=$15. What is the cost-minimizing combination of L and K? How much is the total cost?

Related Discussions:- Cost Minimization for Cobb-Douglas

Marris model, explain marris model of the managerial enterprise

explain marris model of the managerial enterprise

Comparison with our needs - structure of national income, Comparison with O...

Comparison with Our Needs: We can further test our performance by juxtaposing it with our requirements. Admittedly, it is very difficult to determine 'needed' rate of growth w

Indifferentces curve, using the tools of an indifference curve and isoquent...

using the tools of an indifference curve and isoquent, highlight on consumption and production in business economics.

Actinides, Why do actinides exhibit o.s equal to the sum of the valence ele...

Why do actinides exhibit o.s equal to the sum of the valence electrons.

Macechj, according to Tobin 1993,examples of Keynesian unemployment include...

according to Tobin 1993,examples of Keynesian unemployment includes situation where

Monopoly help, Monopoly and Oligopoly help?!? 1. Your firm sells a perfume....

Monopoly and Oligopoly help?!? 1. Your firm sells a perfume. The daily demand for your perfume estimated by your economists is given by P=150-5Q Your marginal cost is constant at $

Assignment , I need someone to solve my assignment

I need someone to solve my assignment

Competitive firm, The Competitive Firm - Price taker - Market ou...

The Competitive Firm - Price taker - Market output (Q) and firm output (q) - Market demand (D) and firm demand (d) - R(q) is straight line Demand and Marginal Re

Determine the solution of the homogeneous system, The reduced row echelon f...

The reduced row echelon form of  A=    is equal to R = (a)  What can you say about row 3 of A? Give an example of a possible third row for A. (b)  Determine the values o

Uses of national income statistics, Uses of national income statistics: ...

Uses of national income statistics: - It helps to organize economic data and activities. - It helps to classify economic activities into various segments or sectors. - It he

Write Your Message!

Captcha
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