Unformatted text preview: L (Hint: K * and L * will be functions of q, v and w ) b) Compute the TC function (Hint: TC will be functions of q, v and w ) c) Compute the TC function if w = v = $4. (Hint: TC will now be function only of q ) d) If K is fixed at K 1 , then the production function is: Show that the STC function is : For the remainder of question (4) assume K 1 = 4 and if w = v = $4. e) Calculate the shortrun marginal cost . f) Calculate the firm’s shortrun variable cost function and the shortrun average variable cost function. g) What is the firm’s shutdown price? (Hint: Think about average variable costs) h) Calculate the firm’s shortrun average total cost function. i) At what price with the firm break even? j) Will the firm produce in the short run if the price is $0.60? Why or why not? 5) Is the elasticity of SAFC with respect to q larger at high output levels or at low output levels? Dr. Steven Waters Econ 380 Page 1 of 1...
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 Spring '11
 Stevens
 Economics, total cost function, $0.60, Dr. Steven Waters

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