Assume a production function Q = Aka L1-a where Q = 100

| November 24, 2016

.0/msohtmlclip1/01/clip_image002.jpg”>1. Assume a production function Q = Aka L1-a where Q = 100, a = 10 and = 0.5 obtain the total cost function C = C(v, w,Q ) supply the necessary information , such as the equation costs. Show how you got the result .

2. Suppose a demand function Q = 2,000 – 20P and a function of the total cost C(Q)= 0.05Q2 + 12,500, with this information,answer the following, showing details as obtained:

a. The average variable cost and average fixed cost. Explain

b. The production level that maximizes profits.

c. The price of the product.

d. The total cost

e. The level of earnings -related costs.

3. Suppose the total cost becomes: C(Q)= .075 + 10,000 with this information, answer the following,showing details as obtained:

a. What changes occurred in the total cost? Show components in detail.

b. The production level that maximizes profits.

c. The price of the product.

d. The total cost

e. The level of earnings -related costs.

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