A firm has the production function y = 4LK. The marginal products are given by MP, = 4K and MPK = 4L. (a) Provide an expression for the long run total cost function. (b) Now suppose that w =r = 25. Write out the expression for the long run total cost curve, and plot it on a graph. 1 (c) With w =r = 25, derive the long run average cost curve, and plot it on a graph. Does this firm experience increasing or decreasing average cost, as the output increases?

A firm has the production function y = 4LK. The marginal products are given by MP, = 4K and MPK = 4L. (a) Provide an expression for the long run total cost function. (b) Now suppose that w =r = 25. Write out the expression for the long run total cost curve, and plot it on a graph. 1 (c) With w =r = 25, derive the long run average cost curve, and plot it on a graph. Does this firm experience increasing or decreasing average cost, as the output increases?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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