Short-run and long-run expansion path

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Reference no: EM131094560

Consider the production function when needed for the following questions. Wage is $20 and rent is $10. Justify your answers.

Q=√LK/2, (MPL=√K/4√L, MPK=√L/4√K)

a) If labor is fixed at 16, minimize expenditure to produce 20 units.

b) If labor is fixed at 16, minimize expenditure to produce 40 units.

c) Labor is no longer fixed. Minimize expenditure to produce 20 units.

d) Labor is no longer fixed. Minimize expenditure to produce 40 units.

e) Using a-d above, graph your results along with the short-run and long-run expansion path on the same graph.

Reference no: EM131094560

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