info:

Two firms 1 and 2 are using both capital (K) and labour (L) to produce identical products. They have different technologies in their productions, which are described as the following production functions:

f1(K1,L1) =aK1+bL1;

f2(K2,L2) =min{aK2,bL2},

wherea,bare two positive constants and the subscripts 1 and 2 represent different firms, respectively. The market prices for capital and labour arerandw.

question:

What are the minimal total costs TC1 and TC2 for Firms 1 and 2 when they produce q1 and q2 amounts, respectively? What are the average costs AC1 and AC2, respectively?