In: Economics
Assume that output is given by Q(L,K)=50L^0.5K^0.5 with price of labour L = w and price of capital K = r
a |
Use the primal formulation of minimising costs to obtain the demand for Labour L and capital K |
2 |
b |
Using the values of L & K obtained above, verify whether the output Q equals the one given in the question by eliminating the values of w and r. Are the primal and dual problems leading to the same answer? |
2 |
c |
What is the total cost for producing Q? |
1 |
d |
What is the average and marginal cost for producing Q? |
1 |
e |
If capital in the short run is fixed at Kwhat is the short-run total cost? |
1 |
f |
Write the values for the derivatives of the Total cost with respect to w and r. Does Shephard’s lemma hold in this case? |
1 |