Unformatted text preview: 5. How does cost change with output, and what is true about the returns to scale in the above production function? 6. Suppose now that k is fixed at some level k in the short run. Find the short run cost function associated with the above production function. There should be some fixed costs in your production function…where do these come from? 7. On the same graph, plot the short run cost function and the long run cost function. At what point do these functions cross or intersect? Hint: don’t be afraid to look at Figure 8.8 and surrounding material for guidance. Repeat problems 6-9 for the production function ) ( 2 1 2 1 l k A q + = ....
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- Spring '09
- Economics, 3 L, run cost function, short run cost