Description of this paper

Suppose the production function for high-quality Brandy is given by

Description

solution


Question

Suppose the production function for high-quality Brandy is given by: q=K^1/2L^1/2, where q is the output of brandy per week and L is labor hours per week. In the short run, K is fixed at 100, so the short run production function is: q=10L^1/2.;a) If capital rents for $10 each and wages are $5 per hour, show that the short run total costs are: STC=1000 +.05q^2;b) how much will the firm produce at a price of $20 per bottle of brandy? How many labor hours will be hired per week? What profit will the firm make? Explain

 

Paper#21206 | Written in 18-Jul-2015

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