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I've heard that Xiaowen is opening two grow houses At the Schreiberwood house the production function is q = 2K^1/4L^1/4 while at the MaGrath Valley house the production function is

I've heard that Xiaowen is opening two grow houses. At the Schreiberwood house the production function is q = 2K^(1/4)L^(1/4) while at the MaGrath Valley house the production function is q = 4K^(1/4)L^(1/4). In both cases w = $16 and r = $16. Hopefully she will produce 200 kilograms of marijuana in time for the Labour Day bash at the Economics department. a. Derive long-run MC curves for both operations. b. How should she allocate these 200 units of production between the two operations if she wishes to minimize costs? Provide a labelled diagram. c. Suppose the MaGrath operation is raided and shut down. Don’t worry. Xiaowen is resourceful. She’s opened another operation in the RAWC. The production function is q = min (L/20, K/40). Input prices are w = 16 and r = 16. How should she allocate her output? Provide a labelled diagram.

Jun 07 2020 View more View Less

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