Consider the following Cobb-Douglas production function: Y = 10L04K04. Suppose that the price of labor is w = 20 and the price of capital if r = 40. a- Derive the total cost curve for this production function. b- Derive the marginal cost curve for this production function. c- Plot the marginal and total cost curves for q = 1,2,3,4,5. What does it tell you about economies of scale for the production function? d- Suppose that the wage rate went up from 20 to 30. What would happen to the total wage bill relative to total costs, wL ;? What would happen to total costs? wL+rk*

Explain the relationship between the production function and the average costs and marginal costs curve of a firm.

A firm's production function is given by Q = 20L0.8 K0.2. At that moment, the firm sets = 1,000 and K = 1,000. Which of the following combinations of L and Klies on the same isoquant? L = 1,063.9; K = 698.7 L= 1,063.9; K = 698.7 L=698.7; K = 1,063.9 L = 1,302.3; K = 936.1 L 936.1; K 1,302.3

Looking at the following plot of a firm's production function, represented by isoquants for production levels and isocost lines for different total costs of production. Which of the following are true? 101 00 9 K, Capital per unit time Cost $38.80 2 Cost $18:40 6 L. Labour per unit time 10 Y Y 4 Y 2 a. Points a and b are each cost minimizing points for the firm at different levels of output. b. Point d will have higher output and lower total cost than point c c. Point e has less output than point b, but a higher total cost. d. The production function exhibits increasing returns to scale. e. It's clear that Point c does not correspond to a cost-minimizing bundle of inputs.