Consider the following Cobb-Douglas production function q = KL for a firm. The firm is faced with market wage rates of w and rental rates of r. If the firm behaves optimally (minimizes costs): a) What are the optimal levels of K and L required by the firm? b) Derive the total cost function, average and marginal cost function
Consider the following Cobb-Douglas production function q = KL for a firm. The firm is faced with market wage rates of w and rental rates of r. If the firm behaves optimally (minimizes costs): a) What are the optimal levels of K and L required by the firm? b) Derive the total cost function, average and marginal cost function
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.9P
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