Question

Consider a firm with technology given by the production function y=x}/227/2 The firm can by factors from competitive markets at prices W1 = 64 and W2 = 3. The firm is targeting an output level of y* = 32. Calculate the firm's average total cost. Round your answer to two decimal places.

Answer 1

# 9: X, 22 02 ½ or y = 2 0.5 0.5 22 W, 64 W2 = 3 y * = 32 Cort function can be given by c = W,, + Wall 6401,+ 302 Lagrangian function can be given by L. 64%,+ 3*, + *(32-***.205) first order condition can be given by al 2 64 - 1.5 A 10.5 21, an, 0.5) дә x 10.5 n o no.) = 64 a L 0, 3 - (0.5*** *205 110.5%; 0.5 -0-5) = 3 de ās 0.5 0.5 32 - %, 0.5 0.5 %, 12 = 32 from & we will get -0.5 A (0.52 (0.59,05 2,-0.5) 21 64 3 CS Scanned with CamScanner

aq 2 64 3 12 2 6 4 2 3 By putting = 64, in equation it we will get 0.5 0.5 > = 32 X, 32 1643 JO13 1% = 6.9282 9. 9.446.9982 : 147.8016 Totel Cort (64x6.9282) + (3 x 147.8016) Tated Cart 88680 96 Average Total Carta Total Cort q 886.8096 32 Average Total Cort - 27.7 128 CS Scanned with CamScanner