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Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
Edition 12ISBN: 978-1133189022Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
Edition 12ISBN: 978-1133189022 Exercise 1
A firm producing hockey sticks has a production function given by 
In the short run, the firm s amount of capital equipment is fixed at K = 100. The rental rate for K is v = $1, and the wage rate for L is w = $4.
a. Calculate the firm s short-run total cost function. Calculate the short-run average cost function.
b. The firm s short-run marginal cost function is given by SMC = q/50. What are the STC, SAC, and SMC for the firm if it produces 25 hockey sticks? Fifty hockey sticks? One hun-dred hockey sticks? Two hundred hockey sticks?
c. Graph the SAC and the SMC curves for the firm. Indicate the points found in part b.
d. Where does the SMC curve intersect the SAC curve? Explain why the SMC curve will always intersect the SAC at its lowest point.
In the short run, the firm s amount of capital equipment is fixed at K = 100. The rental rate for K is v = $1, and the wage rate for L is w = $4.
a. Calculate the firm s short-run total cost function. Calculate the short-run average cost function.
b. The firm s short-run marginal cost function is given by SMC = q/50. What are the STC, SAC, and SMC for the firm if it produces 25 hockey sticks? Fifty hockey sticks? One hun-dred hockey sticks? Two hundred hockey sticks?
c. Graph the SAC and the SMC curves for the firm. Indicate the points found in part b.
d. Where does the SMC curve intersect the SAC curve? Explain why the SMC curve will always intersect the SAC at its lowest point.
Explanation
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The production function is given by: 
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Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
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