BUSMKT
BusEcon_Exam3_SMP

# Assume the following production function q k 5 l 5

• Notes
• 4

This preview shows pages 3–4. Sign up to view the full content.

10. Assume the following production function: Q = K .5 L .5 . Further, assume that in the short-run, capital is fixed at K =16, and that the rental rate r is \$1000 per unit of capital and the wage rate w stands at \$80 per unit of labor. From this given information, the firm's total fixed cost can be shown to be: Hint: Total Cost : TC = rK + wL a. \$8,000 b. \$16,000 c. \$24,000 d. \$12,800 e. none of the above. 11. On the basis of the information given in the previous problem, it can be shown further that the total variable cost is: ( Hint: Think of how L and Q are related to each other ) 12. ABC Corporation serves foods to both a student market and a general public market. The demand in the two market differs: P 1 = 20 - 2 Q 1 for general public P 2 = 15 - Q 2 for student The marginal cost facing the firm is constant at 6. The optimal prices ( P 1 and P 2 , respectively) are: 3

This preview has intentionally blurred sections. Sign up to view the full version.

4
This is the end of the preview. Sign up to access the rest of the document.
• Spring '10
• JOHNSON
• Economics, Tina, Cournot

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern