W14 MIC Problem Set 6(1)

Let w and r be the prices of the labor and capital

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Unformatted text preview: and r be the prices of the labor and capital inputs, respectively. a) Find the equation for the firm’s long-run total cost curve as a function of quantity Q and input prices, w and r. b) Find the solution to the firm’s short-run cost minimization problem when there are exactly six shovels, i.e., capital is fixed at a quantity of 6 units (or K = 6). Derive the equation for the firm’s short-run total cost curve as a function of quantity Q. Graph this curve together with the long-run total cost curve for w=1 and r=1. 4) A competitive industry consists of 5 type A firms and 10 type B firms. Each firm of type A $"10 + P, when P > 10 Supply =% operates with the supply curve: QA when P # 10 & 0, Supply Each firm of type B operates with the supply curve: QB = 2P, for P " 0. De a) Suppose the market! demand is QMamkand = 100 ! 5P . At the market equilibrium, which firms are r et producing, and what is the equilibrium price? ! De b) Suppose the market demand is QMamkand = 370 ! 10 P . At the market equilibrium, which firms are r et producing, and what is the...
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This homework help was uploaded on 03/03/2014 for the course ECON 310 taught by Professor Whinston during the Spring '12 term at Northwestern.

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