2. A farm has the following production function for producing lentils:q = f(K, L) = A (ak/3 + BL'/3)where q is output per acre, K is capital, L is labour, and (A, a, B) are pa-rameters. Denote the wage rate by w, the price of capital by r, and theoutput price by p.a) Assume that the farmer is operating during a labour shortage, so thatlabour is fixed at L. Derive the short-run cost function.b) Describe the role of A in the production function. Calculate the ef-fect of a marginal increase in A on the short-run cost function, andexplain how that result is related to the impact of A on production.c) Using the short-run cost function derived in part a), setup the profitmaximization problem with output as the choice variable.3

Answered: Image /qna-images/answer/34cba4fa-e5ae-414d-b084-c76b07254716.jpg

production fune on för producing lentils: q = f(K, L) = A (aK/3 + BLV/3) where q is output per acre, K is capital, L is labour, and (A, a, B) are pa- rameters. Denote the wage rate by w, the price of capital by r, and the output price by p. a) Assume that the farmer is operating during a labour shortage, so that labour is fixed at L. Derive the short-run cost function.

production fune on för producing lentils: q = f(K, L) = A (aK/3 + BLV/3) where q is output per acre, K is capital, L is labour, and (A, a, B) are pa- rameters. Denote the wage rate by w, the price of capital by r, and the output price by p. a) Assume that the farmer is operating during a labour shortage, so that labour is fixed at L. Derive the short-run cost function.

College Algebra

10th Edition

ISBN:9781337282291

Author:Ron Larson

Publisher:Ron Larson

Chapter3: Polynomial Functions

Section3.5: Mathematical Modeling And Variation

Problem 7ECP: The kinetic energy E of an object varies jointly with the object’s mass m and the square of the...

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