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2. (6 points) The production function is Q=KL. The marginal product for this production function is MP L =K and MP K =L. Let w=1
2. (6 points) The production function is Q=KL. The marginal product for this production function is MPL=K and MPK=L. Let w=1 and r=1 be prices of labor and capital.(a) What is the long run total cost curve? (2)(b) What is the long run average cost curve? Does the cost structure exhibit economy of scale or diseconomy of scale? Explain your answer. (2)(c) What is the short run total cost curve when capital is fixed at 5? (2)
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