Consider the following production function, ? = ?1⁄4?1⁄4?1⁄4 ,
where y = output, K = the
amount of capital, L = the number of employment,
m = quantity of variable materials hired. Let
r
(unit price of capital) = $5, w (wage per employment) =
$3, pm (unit price of variable material) =
$12; Suppose that the firm is minimizing its cost of production
in the short run,
(a) Suppose in short run, the amount of capital is
fixed at...