e difference between fixed costs in the short-run and fixed costs in the long-run
Explain why the rental rate of capital reflects the opportunity cost regardless of whether the firm rents its capital or owns it.
- What is the difference between fixed costs in the short-run and fixed costs in the long-run?
- If the cost function for a firm is C = 25q2 + 15q
- Calculate the average cost.
- Calculate the marginal cost.
- Does this cost function exhibit any fixed costs?
- Why does the marginal cost curve intersect the average total cost curve at the minimum of average total cost?
- Ifw=10andr=2
a. Draw the isocost line for C = 100.
b. Draw the isocost line for C = 100 if the wage is now w=5.
- A firm’s production function is q = K1/2L1/2, the wage is w = 25 and the rental rate of capital is r = 16. Find the optimal amount of K and L if the firm produces 20 units of output.
- A firm’s production function is q = KL, the wage is w = 25 and the rental rate of capital is r = 9. Find the optimal amount of K and L if the firm produces 100 units of output.
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