Econ100B PS2

Econ100B PS2 - 3 4 K 1 4 , and w = 2 , r = 8 . (a) Does the...

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ECO 100B Problem Set 2 Answers will be posted on April 18, 2008 1. Give the formulas for and plot AFC, MC, AVC, and AC if (a) C ( q ) = 10 + 10 q (b) C ( q ) = 10 + q 2 q = f ( L;K ) where K at 10 , w = 5 , and r = 2 . What is the marginal cost if: (a) f ( L;K ) = L 1 2 K 1 2 (b) f ( L;K ) = min f L;K g (c) f ( L;K ) = 2 L + K 3. Suppose that in the short-run, MC ( q ) increases strictly as q increases. Use calculus to show that the MC curve must cross the AC curve at its minimum value (hint: use a similar argument that we used to show MP L crosses AP L at its maximum value). f ( L;K ) = L
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Unformatted text preview: 3 4 K 1 4 , and w = 2 , r = 8 . (a) Does the production function have diminishing MRTS? Does it have diminishing mar-ginal returns in both inputs ( MP L is decreasing in L , and MP K is decreasing in K )? (b) Given a &xed level of production & q , what relationship is there between L and K ? (c) To produce & q units of output, how many units of L and K are used? (d) Can you derive the total cost, C ( q ) of producing q units of output? (e) What is the marginal cost, MC ( q ) ? 5. Do the same as question 4 but suppose that f ( L;K ) = LK 1 2 . 1...
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This note was uploaded on 07/22/2008 for the course ECON 100B taught by Professor Rauch during the Spring '07 term at UCSD.

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