Explore BrainMass
Share

Explore BrainMass

    Cost functions

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A firm has the cost function

    C = (3Wk + 5Wl) (q^2 + q)

    (a) Check that linear homogeneity in input prices is satisfied.

    (b) Suppose Wk = 2 and Wl = 1 . Compute, and roughly graph, the firmâ??s average and marginal cost functions.

    (c) What is the standard relationship between the marginal cost function and the average cost function? Is that expectation fulfilled here?

    (d) Does this firm operate under decreasing, constant, or increasing returns to scale? Why?

    © BrainMass Inc. brainmass.com October 10, 2019, 2:26 am ad1c9bdddf
    https://brainmass.com/economics/microeconomics/cost-functions-demonstrated-377504

    Solution Preview

    Hi,

    ** Please see the attached file for the complete solution response **

    3) The standard relationship between the marginal cost function and the average cost function states that, at constant ...

    Solution Summary

    This solution shows how to calculate the given questions related to cost functions.

    $2.19