production cost

production cost - COMM/FRE 295 Practice Questions Set #3...

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COMM/FRE 295 Practice Questions Set #3 Production and Costs Question 1. Wheat is produced according to the production function Q = 100(K 0.8 L 0.2 ) where Q denotes output, K denotes capital and L denotes labor. (a) Beginning with K = 4 and L = 49, show that the MP of K and L are both decreasing. Show that this production function exhibits a diminishing MRTS. (b) Does this production function exhibit increasing, decreasing or constant returns to scale? Show the mathematics you used to arrive at your answer. (c) With capital fixed at 4 units, derive an expression for the MP of labor and AP of labor. Graph your expressions for MP L and AP L (L on the horizontal axis). (d) If w =10 and r = $5, find cost minimizing combination of K and L to produce 5000 units of Q. Draw a graph to illustrate your result. Question #2 Does the production Y(K, L) = K 2 L exhibit IRS, DRS or CRS? Question #3 A firm's total cost function is given by the equation: TC = 4000 + 5Q + 10Q 2 . Write an expression for each of the following cost concepts:
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This note was uploaded on 05/11/2011 for the course COMM 295 taught by Professor Ratna during the Winter '09 term at UBC.

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production cost - COMM/FRE 295 Practice Questions Set #3...

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