Question

Supppose that a farm's production function is determined by two factors: land area (K) and labour (L). The
production function is specified as follows:

The farm's land area is 500 acres
The unit cost of capital and labour is as follows:
- land $10 per acre
- labour $500 per labour
Complete the following table:
L Q TC AFC AVC ATC
0
1
2
3
4
5
6
7
8
9
10
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12
13
14
15
16
17
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19
20

Answer 1

Answer on Question #71403, Economics / Microeconomics

Q = 64K^0.5 L^0.5,

K = 500 acres,

k = $10 per acre,

w = $500 per labour,

FC = K*k = 500*$10 = $5,000,

VC = w*L, TC = FC + VC, ATC = TC/Q, AVC = VC/Q, AFC = FC/Q.

Complete the following table:

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