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Production function, MC, AVC, TC, lagrangian multipliers

(See attached file for full problem description)

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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)

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Solution Summary

The supply curve is assessed.

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