The following production function, q (L.)fallsstays constantrises(L,K) = — KVALV² + — Kincreasing returns to scaleconstant returns to scaledecreasing returns to scalewill save this response.will have an average cost function that✓ because it has

Returns to scale refers to the proportionate change in output when the respective inputs are…

The following production function, q (L,K) = -K ¹/4 L 1/2+K1/6, will have an average cost function that 4 falls stays constant rises increasing returns to scale constant returns to scale will save this response. because it

The following production function, q (L,K) = -K ¹/4 L 1/2+K1/6, will have an average cost function that 4 falls stays constant rises increasing returns to scale constant returns to scale will save this response. because it

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The following production function, q (L.)
falls
stays constant
rises
(L,K) = — KVALV² + — K
increasing returns to scale
constant returns to scale
decreasing returns to scale
will save this response.
will have an average cost function that
✓ because it has

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Craig and Javad run a paper company. Each week they need to produce 1,000 reams of paper to ship to their customers. The paper plant's longrun production function is Q = 4KL, where Q is the number of reams produced, K is the quantity of capital rented, and L is the quantity of labor hired. The weekly cost function for the paper plant is C = 20K + 4L, where C is the total weekly cost. (a) What ratio of capital to labor minimizes Craig and Javad's total costs? (b) How much capital and labor will Craig and Javad need to rent and hire in order to produce 1,000 reams of paper each week? (c) How much will hiring these inputs cost them?
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