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Econ 100A  Worksheet #11
Cost Functions
Exercise 1
Consider a good
Q
to be produced with inputs
Z
1
and
Z
2
. A production plan in this case can be written
(
z
1
,z
2
,q
)
where
z
1
is
the quantity of input 1,
z
2
is the quantity of input 2 and
q
the quantity of output.
1)
The technology
T
is deﬁned by the following production set:
E
=
{
(0
,
1
,
0)
,
(1
,
1
,
2)
,
(2
,
2
,
3)
,
(2
,
2
,
4)
,
(1
,
3
,
1)
,
(1
,
3
,
4)
,
(2
,
3
,
5)
,
(2
,
3
,
3)
,
(3
,
3
,
4)
}
.
Find the production function related to this technology.
2)
Assume the cost of input
1
is
w
1
= 2
and the cost of input
2
is
w
2
= 4
.
a)
Find the total cost function for
q
=
{
0
,...,
5
}
.
Are there any ﬁxed costs?
b)
Find the average cost and the average variable cost functions.
Exercise 2
For each of the following cost functions
•
Determine whether it is a short run cost function or not,
•
Compute the marginal cost function, the average cost function, the average variable cost function and the average ﬁwed
cost function
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This note was uploaded on 07/09/2010 for the course ECON 100A taught by Professor Woroch during the Fall '08 term at University of California, Berkeley.
 Fall '08
 Woroch
 Microeconomics

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