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Suppose Capital and Labor Are Perfect Substitutes Resulting in a Production

question 89

Essay

Suppose capital and labor are perfect substitutes resulting in a production function of q = K + L.That is,the isoquants are straight lines with a slope of -1.Derive the long-run total cost function TC = C(q)when the wage rate is w and the rental rate on capital is r.


Definitions:

Distal Phalanx

The bone at the tip of a finger or toe, farthest from the body's main structure.

Metacarpal

The metacarpal bones are the five long bones in the hand that connect the wrist to the fingers.

Radial Notch

A small depression or notch located on the ulna bone that articulates with the head of the radius, enabling the rotation of the forearm.

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