12.6 A firm producing hockey sticks has a production function given by q 2K L...

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12.6 A firm producing hockey sticks has a production function given by q 2K L .

In the short run, the firm’s amount of capital equipment is fixed at K 100. The rental rate for K is v $1, and the wage rate for L is w $4.

a. Calculate the firm’s short-run total cost curve. Calculate the short-run average cost curve.

b. What is the firm’s short-run marginal cost function? What are the STC, SATC, and SMC for the firm if it produces 25 hockey sticks? Fifty hockey sticks? One hundred hockey sticks? Two hundred hockey sticks?

c. Graph the SATC and the SMC curves for the firm. Indicate the points found in part (b).

d. Where does the SMC curve intersect the SATC curve? Explain why the SMC curve will always intersect the SATC curve at its lowest point.

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