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 = 10L0.5 K0.5 where L is their number of workers and K is units of capital. The wage rate is $1,000 per week and a unit of capital costs $250 per week. Suppose that when initially producing 100 square feet a week, they use 20 units of capital. a. What is their short-run cost of remodeling 400 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 = 10L0.5 K0.5 where L is their number of workers and K is units of capital. The wage rate is $1,000 per week and a unit of capital costs $250 per week. Suppose that when initially producing 100 square feet a week, they use 20 units of capital. a. What is their short-run cost of remodeling 400 square feet per week? Instructions: Enter your answer as a whole number.
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis
Section: Chapter Questions
Problem 9TY
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