Microeconomics 2nd Edition by Douglas Bernheim

Exercise 6

The production function of a firm that uses labor ( L ) and capital ( K ) to produce its output is F ( L , K ) = 2 LK + K. The price of labor is $4 per unit and the price of capital is $5 per unit. If its level of capital is fixed in the short-run at K = 8, what is its cost of producing 40 units of output If it can vary its capital and labor freely in the long-run, what is its long-run cost of producing 40 units of output