Question
Suppose the production function of Landry, the Laundromat isq=f(L,K) = LK. The wage rate and rental rate on capital are4and25,respectively. a) DerivetheShort run and long-runcostfunctionsfor
Suppose the production function of Landry, the Laundromat isq=f(L,K) = LK. The wage rate and rental rate on capital are4and25,respectively.
a)DerivetheShort run and long-runcostfunctionsfor this firm.
a.[Hint: Calculate L in the short run using the production function and given K.Use MRTS =w/r in the long run.]
b) Create table of Short run and long run total costs and short run and long run average costs for Q = 1 and 5
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Environmental Economics
Authors: Stephen Smith
6th Edition
0199583587, 9780199583584
