In: Economics
3. In order to produce 28 widgets, a firm must use 14 workers in combination with 4 machines.
a. Let q denote the number of widgets, L denote the number of workers, and K denote the number of machines. Write down the production function that represents this technology for producing widgets. In a diagram with L on the horizontal axis and K on the vertical axis, draw the isoquant associated with q = 56.
b. Let w represent the wage rate and r represent the rental rate of capital. Solve for the firm’s factor demand functions for L and K.
c. Solve for the firm’s long run cost function. (2 points).