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A firm's production function is given by q minM, L1/2, where M is the number of machines and L is the amount of labor that it uses.The price of labor is $1and the price of machines is $4 per unit.The firm's long-run marginal cost curve is
A) upward sloping and gets flatter as Q increases.
B) a straight line with slope 2.
C) a straight line with slope 1.
D) upward sloping and gets steeper as Q increases.
E) a straight line with slope 4.
Production Function
A mathematical model describing the relationship between the inputs used in production and the output of goods or services produced.
Long-Run Marginal Cost Curve
A graphical representation showing the change in total cost associated with producing one more unit of output when all inputs are variable.
Price of Labor
The compensation, including wages, salaries, and benefits, that employers pay to employees for their labor or work done.
- Assess how choices regarding inputs impact a firm's cost within the framework of production functions.
- Acquire insight into how the formation of cost curves influences the decision-making process of firms in the immediate and extended future.
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Learning Objectives
- Assess how choices regarding inputs impact a firm's cost within the framework of production functions.
- Acquire insight into how the formation of cost curves influences the decision-making process of firms in the immediate and extended future.
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