A manufacturing firmâs production function is Q = KL + K + L. The price r of capital services is equal to 1, and let w denote the price of labor services. If the firm is required to produce 5 units of output, for what values of w would a cost-minimizing firm use
a) only labor?
b) only capital?
c) both labor and capital?
A manufacturing firmâs production function is Q = KL + K + L. The price r of capital services is equal to 1, and let w denote the price of labor services. If the firm is required to produce 5 units of output, for what values of w would a cost-minimizing firm use
a) only labor?
b) only capital?
c) both labor and capital?
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Consider a firm with production function f(L, K)=2L+6K. Assume that capital is fixed at K=6. Then, the amount of labor necessary to produce q units is?
| A |
L(q,6)= q-12 |
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| B |
L(q,6)= q/18-5 |
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| C |
L(q,6)= q/2-18 |
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| D |
L(q,6)= 3q/5-2 |
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| E |
L(q,6)= q2/2-12 |
Consider a firm with production function f(L, K)= 4L2/3K1/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=4 and the price of labor w=2. Then, the average cost of producing q units is?
| A |
AC(q)= 4/q+q1/2/4. |
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| B |
AC(q)= 2/q+1/4q1/3. |
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| C |
AC(q)= 2/3q+1/q1/3. |
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| D |
AC(q)= 1/3q+q1/2. |
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| E |
AC(q)=8/q+2q1/2. |
Consider a firm with production function f(L, K)=3L1/3K2/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=5 and the price of labor w=3. Then, the cost of producing q units is?
| A |
C(q)=3+q2/9. |
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| B |
C(q)=10+q3. |
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| C |
C(q)=5+q3/9. |
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| D |
C(q)=2/3+q2/3. |
|
| E |
C(q)=1/3+q3/3. |
