Production of bikes requires 6 workers for every 2 machines, such that bikes are produced according to:
F(K,L)=min(6K,2L)
1) Solve for the long run optimal amount of capital K*(w,r,q) and labor L*(w,r,q), and the long run minimized cost C*(w,r,q)
2) Compare and contrast the methods for solving the short run and long run cost minimization problems. Why do the two problems require different methods for solving?
3) Suppose this is a consumer theory problem. Setup and solve the expenditure minimization problem for a consumer with utility u(x,y) = min(2x,6y). Identify the compensated demand functions and the minimized expenditure function
4) Compare and contrast the problems and solutions for part 4 and 6. How are they similar? How is the economic interpretation different?
Production of bikes requires 6 workers for every 2 machines, such that bikes are produced according to:
F(K,L)=min(6K,2L)
1) Solve for the long run optimal amount of capital K*(w,r,q) and labor L*(w,r,q), and the long run minimized cost C*(w,r,q)
2) Compare and contrast the methods for solving the short run and long run cost minimization problems. Why do the two problems require different methods for solving?
3) Suppose this is a consumer theory problem. Setup and solve the expenditure minimization problem for a consumer with utility u(x,y) = min(2x,6y). Identify the compensated demand functions and the minimized expenditure function
4) Compare and contrast the problems and solutions for part 4 and 6. How are they similar? How is the economic interpretation different?
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