Production function, MC, AVC, TC, lagrangian multipliers
Not what you're looking for?
(See attached file for full problem description)
---
Consider the original following production function:
f(x) = x ^ 1/3
but now there is a fixed cost of F per year that the firm has already paid for this year.
a) assuming W = 1 and F = 2, draw the marginal cost function (MC), average variable cost (AVC) and the total cost function (TC). Be sure to find Y such that MC = AVC and Y such that MC = AC
b) What is the short run function? (This year in this case)
c) What is the long run supply function? (Next year in this case)
Purchase this Solution
Solution Summary
The supply curve is assessed. A production function for lagrangian multipliers is examined.
Solution Preview
Please see the attached file.
Consider the original following production function:
f(x) = x ^ 1/3
but now there is a fixed cost of F per year that the firm has already paid for this year.
a) assuming W = 1 and F = 2, draw the marginal cost function (MC), average variable cost (AVC) and the total cost function (TC). Be sure to find Y such that MC = AVC and Y such that MC = AC
b) What is the short run function? (This year in this case)
c) What is the long run supply function? (Next year in this case)
I assume here that 'x' is a production factor (such as labor) and that W is its cost per unit. In order to find the marginal cost function, we first need to find the total cost function.
Let's call Q to quantity produced. We have that:
(the production function)
By isolating x in this function, we can find how much labor we need in order to produce a given quantity Q:
So, if we want to produce, say, 3 units of the good, we would need units of labor. Therefore, the ...
Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.