Tangency between the isocost line and the isoquant

Reference no: EM131789744

Question: 1. Assume that the Cobb-Douglas production function for a beer manufacturer is q = 1.52 L^0.6 K ^0.4. Calculate the average fixed cost if we also assume that the firm's capital is fixed at 250 units and the rental rate of capital is $5 per unit.

2. Discuss and explain the situation involving the tangency between the isocost line and the isoquant.

Reference no: EM131789744

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