Virksomhedsøkonomi (VØ el. EØ)

Construction of cost function

15. september kl. 18:17 af Hansjans - Niveau: Universitet/Videregående

Construction of a cost-function Ralph must select the best combination of four factors of production denoted, z1, z2, z3 and z4 (all of them are greater or equal to zero), to produce q units of output. technical requirements are defined by the following constraints. z1 + z2 <=q, z3 + z4 <=q, z <=5 and z3 <= 6. factor prices are 1, 2, 3 and 4 per unit (respectively) a) determine the cost curve for 0 <= q <= 10 and plot the cost curve: How do you interpret the shadow price b) Repeat for a particular short-run setting z1 (sign above z) = 3 Thanks for you help in advance


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