Find and sketch the expansion path

Reference no: EM133643995

Question

Castro's daily production function for producing custom-printed mugs is q = 15K^0.5L^0.5. The price of labor is $40 and the price of capital is $10.

a. Find and sketch the expansion path.

b. How much capital and labor should Castro employ to produce 150 mugs a day?

c. What is the lowest possible cost of producing 150 mugs a day?

d. Repeat parts (b) and (c), for an output level of 450 mugs.

e. What is the firm's LRAC at q = 150? At q = 450? What does the firm's LRAC look like over this range of output? Are there economies of scale? Explain.

Reference no: EM133643995

Questions Cloud

Diversity would provide security against real estate crisis : The large number of mortgages and their diversity would provide security against a real estate crisis?

Pareto efficiency exchange equilibrium : We showed how a Pareto efficiency exchange equilibrium can be described as the solution to a constrained maximum problem.

Money is lubricant in the economy : Money is a lubricant in the economy just like you have oil in your car engine. Money lubricates the wheels of the economy,

Dollars fulfill three important economic functions : Dollars fulfill three important economic functions. Are giant stones as money any more strange than relying on gold?

Find and sketch the expansion path : Find and sketch the expansion path. How much capital and labor should Castro employ to produce 150 mugs a day?

Explain why it is good indicator for the economy : Explain why it is a good indicator for the economy and what it forecasts for the economy.

Neutrophilic band and neutrophilic segmented cells : Describe two main morphological differences between neutrophilic band and neutrophilic segmented cells.

Total marginal cost of ownership of this old asset : Calculate the total marginal cost of ownership of this old asset. For easch of the next 5 years.

Discuss how mutations can be beneficial : Explain the process of making rRNA. Discuss how mutations can be beneficial.

User Account

All Pages