Practice Problems 8.pdf - National University of Singapore...

Info icon This preview shows page 1. Sign up to view the full content.

National University of Singapore EC2101 Microeconomic Analysis I Department of Economics Semester 1 AY 2016/2017 1 Practice Problems 8 Cost II Presentation schedule: two student presentations; one student presents Question 1 and Question 2, the other student presents Question 3 and Question 4. Question 1 A firm has production function Q = L + K . Let w and r be the prices of labor and capital, respectively. Assume the firm will use both L and K . Derive the demand functions for L and K respectively. Is labor a normal input? Is capital a normal input? Question 2 A firm has production function Q = 50 LK . Let w = 25 and r = 100 be the prices of labor and capital, respectively. a) Find the equations of the firm’s long-run average cost curve. b) Find the equations of the firm’s short-run average total cost curve when capital is fixed at K . For simplicity, assume the fixed cost is sunk. c) In a graph, sketch the long-run average cost curve and the short-run average total cost curves for levels of capital
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern