Question
In: Economics
Consider a firm with the additive production function we discussed in class: f(K, L) = 2√...
Consider a firm with the additive production function we discussed in class: f(K, L) = 2√ L + 2√ K.
(a) Derive the firm’s long run demand curve for labor, as well as the firm’s long run demand curve for capital.
(b) Notice that the firm’s long run labor and capital demand curves do not exhibit any substitution effects. That is, if the price of labor increases, the firm’s use of capital does not change. Why do you think this is the case?
Solutions
Rahul Sunny answered 3 years agoRelated Solutions
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Consider the production function F(L,K) = L^2/3 K^2/3 .
(f) Does this production function exhibit increasing, decreasing
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(g) Find the total cost, average cost and marginal cost of
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Consider a firm with a
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A) Derive the
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Problem 2 Consider an economy described by the production function: Y = F(K,L) = K 1/2...
Problem 2
Consider an economy described by the production function: Y =
F(K,L) = K 1/2 L 1/2
a. What is the per- worker production function?
b. Assuming no population growth or technological progress, find
the steady- state capital stock per worker, output per worker, and
consumption per worker as a function of the saving rate and the
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c. Assume that the depreciation rate is 10 percent per year.
Make a table showing steady-state capital per worker, output...
Suppose a production function is given by F ( K , L ) = K^(1/2) L^(1/2), the...
Suppose a production function is given by F ( K , L )
= K^(1/2) L^(1/2), the price of capital “r” is $16, and the price
of labor “w” is $16.
a. (5) What combination of labor and capital minimizes the cost of
producing 100 units of output in the long run?
b. (5) When r falls to $1, what is the minimum cost of producing
100 pounds of pretzels in the short run? In the long run?
c. (5) When...
The production function of a firm is given by F(K, L)=KL. Assume that capital (K) is...
The production function of a firm is given by F(K, L)=KL. Assume
that capital (K) is fixed at K=1 in the short run. Then the amount
of labor (L) needed to produce 4 unit of output is equal to
___.
The production function of a firm is given by F(K, L)=KL. Assume that capital (K) is...
The production function of a firm is given by F(K, L)=KL. Assume
that capital (K) is fixed at K=1 in the short run. Then the amount
of labor (L) needed to produce 4 unit of output is equal to ___.
Group of answer choices 16 1 4 8 2
Suppose a production function is given by F ( K , L ) = K 1 2...
Suppose a production function is given by F ( K , L )
= K 1 2 L 1 2, the price of capital “r” is $16, and the price of
labor “w” is $16.
a. (5) What combination of labor and capital minimizes the cost of
producing 100 units of output in the long run?
b. (5) When r falls to $1, what is the minimum cost of producing
100 pounds of pretzels in the short run? In the long...
2. Suppose a production function is given by F ( K , L ) = K 1...
2. Suppose a production function is given by F ( K ,
L ) = K 1 2 L 1 2, the price of capital “r” is $16, and the price
of labor “w” is $16.
a. (5) What combination of labor and capital minimizes the cost of
producing 100 units of output in the long run?
b. (5) When r falls to $1, what is the minimum cost of producing
100 pounds of pretzels in the short run? In the...
Consider a firm with a production function of the following form:F (L, K) = L(1/4)K(1/2) 20...
Consider a firm with a production function of the following
form:F (L, K) = L(1/4)K(1/2)
20
the corresponding marginal products are
MPL = 1 L(−3/4)K(1/2)
4 20MPK = 1 L(1/4)K(−1/2)
2 20
The cost of a unit of labour is the wage rate w and the cost of a
unit of capital is the
rental rate r. The firm is free to adjust all factors of
production. (19 points)
a. Does this production function exhibit decreasing returns,
increasing returns, or...
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