Copyright

Suppose that a firms fixed proportion production function is given by: q = min (5K, 10L), and...

Question:

Suppose that a firms fixed proportion production function is given by: q = min (5K, 10L), and that r = 1, and w = 3.

a. Does this function exhibit decreasing, constant, or increasing returns to scale?

b. Calculate the firm's long-run total, average, and marginal cost curves.

c. Suppose that K is fixed at 10 in the short run. Calculate the firm's short-run total, average, and marginal cost curves. What is the marginal cost of the 10th unit? The 50th unit? The 100th unit?

Cost Function:

The cost function measures the minimum cost of producing a given level of output for some fixed input prices. It gives us an idea about the technological choices available to the firm.

Answer and Explanation: 1

Become a Study.com member to unlock this answer!

View this answer

(a) A production function exhibits constant returns to scale if the following holds:

{eq}F(\lambda K, \lambda L) = \lambda F(K,L) {/eq} for...

See full answer below.


Learn more about this topic:

Loading...
Cost Function in Calculus: Formula & Examples

from

Chapter 20 / Lesson 13
114K

Learn about the cost function formula. Discover how to find cost function. Explore average cost function and marginal cost function. See examples of finding the cost.


Related to this Question

Explore our homework questions and answers library