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Question 3 A firm has production function q=2LK+K . The price of labor is w=1 and the price of capital is r=1. (L and Kdo not have to be integers.)
a) Suppose in the short run, capital is fixed at K=5. What is the equation of the shortrun total cost curve?
b) In the long run, what is the cost-minimizing input combination when the firm produces q=18? What is the level of total cost at this input choice?
c) Suppose now w=8 and r=1. What is the long-run cost-minimizing input
combination when the firm produces q=3? What is the level of total cost at this input choice? Suppose in the short run, capital is fixed at K=1. What is the level of total cost in the short run if the firm produces q=3?
