Unformatted text preview: + l ² ) ³=² , with ² > and ³ > . If q = q > and the rental rates for capital and labor are v > and w > respectively, solve for the derived demand for l and k . 4. Suppose that the total cost is C ( q ) = 10 + 2 q & 1 2 q 2 + 4 q 3 (a) Solve for marginal cost, MC ( q ) (b) Solve for average cost, AC ( q ) (c) Graph C ( q ) ;MC ( q ) , and AC ( q ) 5. Suppose that the price of hanggliders for villians is p > . Oscorp&s production function for hanggliders for villians is q ( l;k ) = ( l & k 1 & & ) ³ , where & 2 (0 ; 1) and ³ 2 (0 ; 1) . The cost per unit of l is w > and the cost per unit of k is v > . (a) Solve for Oscorp&s demand for l and k , and call these l ± and k ± . (b) How does l ± vary with i. p ii. & iii. w...
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 Spring '08
 Govel
 Economics, Microeconomics, rental rate, Isocost Line

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