4. A firm has production function q = KL. The wage and rental rates are both 10. Does this production function exhibit increasing, decreasing, or constant returns to scale? Explain. b. The firm currently has 50 units of capital. What are its short run total cost (TC), marginal cost (MC), average variable cost (AVC), and average total cost (ATC) functions? Draw MC, AVC, and ATC on a well-labeled graph. Does this firm have a diminishing marginal product of labor? Explain.
4. A firm has production function q = KL. The wage and rental rates are both 10. Does this production function exhibit increasing, decreasing, or constant returns to scale? Explain. b. The firm currently has 50 units of capital. What are its short run total cost (TC), marginal cost (MC), average variable cost (AVC), and average total cost (ATC) functions? Draw MC, AVC, and ATC on a well-labeled graph. Does this firm have a diminishing marginal product of labor? Explain.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Cost Of Production
Section: Chapter Questions
Problem 3CQQ
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