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) Q=10L^0.5K^0.5, where L is their number of workers and K is units of capital. The wage rate is $250 per week and a unit of capital costs $250 per week. Suppose that when initially producing 100 square feet a week, they use 10 units of capital. a. What is their short-run cost of remodeling 1,000 square feet per week? Instructions: Enter your answer as a whole number. $ b. What is their long-run cost of remodeling 1,000 square feet per week? Instructions: Enter your answer as a whole number. $
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)
Q=10L^0.5K^0.5,
where L is their number of workers and K is units of capital. The wage rate is $250 per week and a unit of capital costs $250 per week. Suppose that when initially producing 100 square feet a week, they use 10 units of capital.
a. What is their short-run cost of remodeling 1,000 square feet per week?
Instructions: Enter your answer as a whole number.
$
b. What is their long-run cost of remodeling 1,000 square feet per week?
Instructions: Enter your answer as a whole number.
$
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