Fixed proportion production function Q = min(5K, 10L)
Suppose that a firm’s fixed proportion production function
is given by Q = min(5k,10L)
The firm’s Total Cost (TC) function is given by TC = vK +
wL,
where v is the cost of K and w is the cost of L.
v = 1
w = 3
TC = K + 3L
a) Calculate the firm’s long-run total, average and marginal
functions.
b) Suppose that K is fixed at 10 in the short run. Calculate
the firm’s short-run total, average and marginal cost functions, and state the
domain of the functions.
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