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In the short run, a firm's capital stock is fixed at =16. The firm's production function is q=8LK which has marginal products: MP l =4K/L and MP k =...
In the short run, a firm’s capital stock is fixed at =16. The firm’s production function is q=8√LK which has marginal products: MPl=4√K/L and MPk= 4√L/K. The wage and rental rate of capital are w=2 and r=6.
a. Derive the firm’s short-run production function.
b. Derive the firm’s short-run total cost function and graph it.
c. Derive the firm’s short-run average total cost function and graph it.
d. Derive the firm’s short-run marginal cost function and graph it.
e. Suppose the firm is producing =10 units of output. In the long run, how should it adjust labor and capital?
