Assume that output is given by Q(L,K)=50L^0.5K^0.5 with price of labour L = w and price...

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

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Expert Solution

Rahul Sunny answered 1 year ago

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