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1. Rodrigo's cost structure. Rodrigo's is a small Inwood-based company that provides business services to convenience stores. Its offices are housed in a small building
1. Rodrigo's cost structure. Rodrigo's is a small Inwood-based company that provides business services to convenience stores. Its offices are housed in a small building that Rodrigo '3 rents for $3, 000. Rodrigo '3 employees are paid $100 per hour. Monthly output, expressed in billable hours, is given by y = Ak1/3l5/9, where l denotes the overall number of hours worked by the employees, k is capital and A is TFP. [Hint: Keep k; and A as unspecied parameters] (a) Compute and draw Rodrigo's total cost function. (5 points) ( ) (c) Compute and draw Rodrigo's marginal cost function. (5 points) ) (7' Compute and draw Rodrigo's average cost function. (5 points) Compute the effect of an increase in rent on Rodrigo's total, average, and marginal cost. (5 points) (e) Compute the effect of an increase in wages on Rodrigo's total, average, and marginal cost. (5 points) (f) Compute the effect of an improvement in technology on Rodrigo's total, average, and marginal cost. (5 points)
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