Chapter 8: Costs R2.1) A firm produces according to Q = RL, with MP, = and...

Question:

Chapter 8: Costs R2.1) A firm produces according to Q = RL, with MP, = and MPx = Input prices are w=$90 and r=$10 per day. a) Assume that in the short run, the amount of capital is fixed at 15 units. Find the short-run TC equation. Explain your work. b) With the technology above, we can show that the lowest TC is obtained using L=Q/3 and K = 3Q as long run input choices. Find the long-run TC equation. Show your work.

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