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Unformatted text preview: machines. a. Write down a production function for the firm. b. What is the longrun total cost function, LTC(Q, w,r), for this firm? 5. Using 2 isocost lines and at least 1 isoquant, draw a situation in which an increase in the wage rate alters the long run total cost of producing a fixed quantity of output, Q . Does LTC rise or fall? 6. Using 2 isocost lines and at least 1 isoquant, draw a situation in which an increase in the wage rate does not alter long run total cost of producing a fixed quantity of output, Q . 7. If a firms production function takes the form F(L, K) = L + 2K, and it faces wage rate, w=3, and rental rate on capital, r=4, what is LTC(220, 3, 4)? 8. Suppose at Q=100, w=2, r=3, and K =11, we have STC(100,2, 3, 11)=60 Suppose it is also true that LTC(100, 2, 3)=51. What is the most we can say about K*(100, 2, 3)?...
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 Winter '11
 Babcock

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