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    Cost function, input price and production function.

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    A firm uses one input, L, to generate output, q, according to the production function q=16L^2. The input price is w and the fixed costs are c_0 > 0.
    i) Show that the firm's cost function is given by C(q)=c_0 + w(square root)q/4.
    ii) Show that dq/dL increases with L while dC/Dq decreases with q.

    See the attached file for the full problem.

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    Solution Summary

    We solve a couple problems involving a cost function and input price. Response includes Microsoft Word attachment.