Question

Consider the production function q = f(k,l) = l^0.8 k^0.2 The cost of labor and capital are w

and v respectively. Aside from the cost of labor and capital, there are no costs.

Assume all inputs are variable

f. Find long run marginal cost.

Answer 1

Hi! Welcome to Chegg!

In long run, all inputs are variable.

We have production function:

Cost = wl + vk

Optimal condition:

Using this in production function, we get:

Long run Cost is given by:

Long run marginal cost:

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