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Hannah and Sam run Moretown Makeovers, a home remodeling business. The number of square feet they can remodel in a week is described by the
Hannah and Sam run Moretown Makeovers, a home remodeling business. The number of square feet they can remodel in a week is described by the Cobb-Douglas production function Q=F(L,K) Q=10L^0.25K^0.25 where L is their number of workers and K is units of capital. The wage rate is $1,250 per week and a unit of capital costs $20,000 per week. Suppose that when initially producing 10 square feet a week, they use 0.25 units of capital.
What is their long-run cost of remodeling 100 square feet per week?
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