3. Consider a producer with the production function y = J(L + K). The price of L is 2 and the price of K is 4. (a) Find the cost function, average cost function and marginal cost function. (b) Does this function exhibit decreasing, increasing, or constant returns to scale? (c) If the quantity of K is fixed at K = 2 in the short run, then what is the cost function?

3. Consider a producer with the production function y = J(L + K). The price of L is 2 and the price of K is 4. (a) Find the cost function, average cost function and marginal cost function. (b) Does this function exhibit decreasing, increasing, or constant returns to scale? (c) If the quantity of K is fixed at K = 2 in the short run, then what is the cost function?

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis

Section: Chapter Questions

Problem 1DQ

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