Question
A firm faces a long-run total cost of C(Q,w, r) = 2Q(wr)^(1/2) where w is the wage rate and r is the rental rate of
A firm faces a long-run total cost of C(Q,w, r) = 2Q(wr)^(1/2) where w is the wage rate and r is the rental rate of capital. Find the elasticity of marginal cost with respect to wages. Based on your elasticity, can this firm avoid a portion of a wage increase by substituting capital for labor?
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The Economics of Women Men and Work
Authors: Francine D. Blau, Marianne A. Ferber, Anne E. Winkler
7th edition
978-0190670863, 019067086X, 132992817, 978-0132992817
