Question
2. For the production function in exercise 1, let the price of labor be w and the price of capital be r. a. The efficient
2. For the production function in exercise 1, let the price of labor be w and the price of capital be r.
a. The efficient usage function for labor is L* = _______.
b. The efficient usage function for capital is K* = ________ .
c. Find the long-run cost functions: LTC, LAC, and LMC.
d. Show that both LAC and LMC increase at any Q when either w or r increases.
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Microeconomics
Authors: David Besanko, Ronald Braeutigam
5th edition
1118572270, 978-1118799062, 1118799062, 978-1118572276
