What is their short run cost of remodeling

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Hannah and Sam run Moretown Makeovers, a home remodeling business. The number of square feet they can remodel in a week is described by the Cobb-Douglas production function Q = F(L,K) = 10L0.5K0.5, where L is their number of workers and K is units of capital. The wage rate is $100, and a unit of capital costs Hannah and Sam $1600 per week.Suppose that when initially producing 100 square feet a week, they use 2.5 units of capital.

a. What is their short run cost of remodeling 400 squarefeet per week?

b. What is their long run cost of remodeling 400 square feet per week?

Reference no: EM131198120

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