ECON 212 Quiz: ECON 212quizQuiz 5 Section 001 Solution

• School: Queen's University
• Department: Economics
• Course: ECON 212
• Professor: All

Document Summary

Econ 212 - winter 2017 - section 001 - quiz 5 - solution. You own a company, and your production function is: Q = 3 l2/3 k 1/3 where q is the output produced by your company, l is the labor employed by your company, and k is the capital employed by your company. 1. a. ) (3 points) given output q, price of labor w, and price of capital r, derive the cost- minimizing quantities of labor (l) and capital (k). To nd the cost-minimizing quantities of l and k, calculate: L = w r = k = 1. 2 w r l into the production function: Q = 3 l2/3 k 1/3 = 3 l2/3 (cid:0) 1. Thus, the cost-minimizing input quantities are: l = (cid:0) w. 1. b. ) (4 points) using the cost-minimizing quantities of l and k that you nd in part (1. a), derive the long-run total cost curve t c(q) for w = 3 and r = 12.