long run cost function

long run cost function - C ( q ) = 2 3 q 2 Marginal cost:...

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Example of Long Run Cost Function ( Min L,K C = wL + rK s.t. q = K 1 2 + L 1 2 ( Min L,K C = wL + rK s.t. K =( q L 1 2 ) 2 n Min L C = wL + r (( q L 1 2 ) 2 ) F.O.C: ∂C ∂L =0 ,So lut ionis : n L = r 2 q 2 ( w + r ) 2 o and K =( q ( r 2 q 2 ( w + r ) 2 ) 1 2 ) 2 = q 2 w 2 ( w + r ) 2 Thus, the cost becomes: C ( w,r,q )= w ( r 2 q 2 ( w + r ) 2 )+ r ( q 2 w 2 ( w + r ) 2 )= wr q 2 w + r If w =2 and r =1 , C ( q )= wr q 2 w
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Unformatted text preview: C ( q ) = 2 3 q 2 Marginal cost: MC ( q ) = 4 3 q Average cost AC ( q ) = C ( q ) q = 2 3 q 10 7.5 5 2.5 10 7.5 5 2.5 x y 1...
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This note was uploaded on 04/25/2010 for the course BUS 283 taught by Professor Jones during the Spring '10 term at Aarhus Universitet.

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