Question

For each of the following production functions (a and b) find the following equations (i-iii) in terms of Q0 ,w and r.

i) MRTS L,K

ii) Long-run capital and labor demand curve.

iii) Long-run total cost curve.

iv) Short -run capital and labor demand curve if the firm is stuck with K = 9.

v) Short- run total cost if the firm is stuck with K =9 .

(a ) Q = 5L^(1/2) * K ^(1/2)

(b) Q = LK + 7L

Answer 1

Doing the first 5 parts.

a)

b) Long-run capital and labor demand curve

c) Long-run cost curve:

d) Short-run capital and labor demand curve if the firm is stuck with K = 9

e) Short-run total cost if the firm is stuck with K =9

.