Answer to Question #154466 in Microeconomics for Ravi

Question

Consider a profit-maximizing firm with the production function Y = K+L, where Y denotes the quantity of output, and K and L denote the amount of capital and Labour used. Suppose w is the wage rate for per unit of labor employed and r is the rent for per unit of capital. The cost function is given by

a) C(y) = min{w, r}*y

b) C(y) = y/min{w, r}

c) C(y) = (w + r)*y

d) None of the above

Answer 1

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