Average variable cost and average fixed-average total cost

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Reference no: EM131091298

Suppose Ralph hires workers at his supermarket at a wage rate of $12/hour. Ralph currently has 10 checkout stands (i.e., capital), each with a rental rate of $10/hour. The production of customers served (i.e., output) is determined by the hourly production function: Q = 0.5L^0.75 *K^2.

For the questions that follow, the number of checkout stands is fixed. Show your work clearly.

a. Graph Ralph’s TP curve.

b. On a new graph, graph Ralph’s MPL and APL curves.

c. Derive Ralph's short-run total cost function.

d. Derive the corresponding equations for the marginal cost (MC), average variable cost (AVC), average fixed cost (AFC), and average total cost (ATC) functions.

Reference no: EM131091298

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