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Microeconomics 2nd Edition by Douglas Bernheim
Edition 2ISBN: 978-0071287616Microeconomics 2nd Edition by Douglas Bernheim
Edition 2ISBN: 978-0071287616 Exercise 7
A firm's technology for producing its output from labor ( L ) and capital (K) is
. The wage is $2 per unit of labor and the cost of capital is $5 per unit of capital.
a. Does the firm's technology have a declining MRTS LK
b. What is the firm's cost function if both inputs are variable
c. Does the firm have economies of scale, diseconomies of scale, or neither
d. Suppose that the firm is initially producing 30 units of output. What is its cost function in the short run (when capital is fixed) Graph the long-run cost function and this short-run cost function in the same figure, labeling clearly all the important features such as where they each hit the vertical axis and any places they touch.
. The wage is $2 per unit of labor and the cost of capital is $5 per unit of capital.a. Does the firm's technology have a declining MRTS LK
b. What is the firm's cost function if both inputs are variable
c. Does the firm have economies of scale, diseconomies of scale, or neither
d. Suppose that the firm is initially producing 30 units of output. What is its cost function in the short run (when capital is fixed) Graph the long-run cost function and this short-run cost function in the same figure, labeling clearly all the important features such as where they each hit the vertical axis and any places they touch.
Explanation
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Microeconomics 2nd Edition by Douglas Bernheim
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