What is the cost function of power plant

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The power plant's fuel cost is 6c per kWh when coal's price is $120 per metric ton. Now we know that the production function of this power plant is given by: Q = min {L/a, K/b, Coal/c} Here, the unit of Q is 1000 kWh or 1 mWh; the unite of coal is metric ton.

(i) What is the rationale behind the above specification of production function?

(ii) Knowing what we obtained in quiz #4, c = ? Why?

(iii) What is the cost function of this power plant? [assume that wage rate is w, capital price is r, and coal's price is $120 per metric ton. ]

Reference no: EM133078545

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