Answered step by step
Verified Expert Solution
Question
1 Approved Answer
(b) (3 Points) Suppose you solve the Lagtangisn, and you find that at Q=64, the resulting labor and capital are (L,K)=(16,64). Explain intuitively what this
(b) (3 Points) Suppose you solve the Lagtangisn, and you find that at Q=64, the resulting labor and capital are (L,K)=(16,64). Explain intuitively what this cost thet 15 incutied by using 46 unis (6) Ge laber une Guluits ff cepitht (c) (2 Points) What is the lowest total cost that the firm can pay to produce 64 units of output? (d) (6 Points) Use the following blank graph to draw the firm's isoquant for Q=64, the firm's corresponding isocost line at its optimal cost, and label the corresponding optimal levels of labor and cepital. 12. (3 Points) What is the equation that gives us the ratios showing optimality in how firms minimize costs? (Hint: It's a version of the equimarginal principle.) 11. Answer these questions about the same sandwich company from the previous two questions. (a) (6 Points) Set up the firm's cost-minimization Lagrangian equation when Q= 64. (Note: You do NOT need to solve it!) 1=210.520.5grh5(601260.5L0.5) (b) (3 Points) Suppose you solve the Lagtangisn, and you find that at Q=64, the resulting labor and capital are (L,K)=(16,64). Explain intuitively what this cost thet 15 incutied by using 46 unis (6) Ge laber une Guluits ff cepitht (c) (2 Points) What is the lowest total cost that the firm can pay to produce 64 units of output? (d) (6 Points) Use the following blank graph to draw the firm's isoquant for Q=64, the firm's corresponding isocost line at its optimal cost, and label the corresponding optimal levels of labor and cepital. 12. (3 Points) What is the equation that gives us the ratios showing optimality in how firms minimize costs? (Hint: It's a version of the equimarginal principle.) 11. Answer these questions about the same sandwich company from the previous two questions. (a) (6 Points) Set up the firm's cost-minimization Lagrangian equation when Q= 64. (Note: You do NOT need to solve it!) 1=210.520.5grh5(601260.5L0.5)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started