Edit que 3. Consider the following production function: y=f(L,K)=min{L,2K} . (c) Determine the long-run cost function c(w,r,y) , where r is the rental rate of capital, w is the wage rate, and y is the target output. (d) Suppose the market price of output is p . Solve the firm's long-run profit maximization problem (using the cost function above). Briefly describe the firm's supply decision.
Edit que 3. Consider the following production function: y=f(L,K)=min{L,2K} . (c) Determine the long-run cost function c(w,r,y) , where r is the rental rate of capital, w is the wage rate, and y is the target output. (d) Suppose the market price of output is p . Solve the firm's long-run profit maximization problem (using the cost function above). Briefly describe the firm's supply decision.
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.9P
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Edit que 3. Consider the following production function:
y=f(L,K)=min{L,2K}
. (c) Determine the long-run cost function
c(w,r,y)
, where
r
is the rental rate of capital,
w
is the wage rate, and
y
is the target output. (d) Suppose the market price of output is
p
. Solve the firm's long-run profit maximization problem (using the cost function above). Briefly describe the firm's supply decision.
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