One Model of a Company's Costs Is Given by the Short-Run

question 241

Essay

One model of a company's costs is given by the short-run Cobb-Douglas cost curve $C ( x ) = K x ^ { \frac { 1 } { a } } + F$ , where a is a positive constant, F is the fixed cost, and K measures the available technology.The average cost of manufacturing a quantity x of a good is defined to be $A ( x ) = \frac { C ( x ) } { x }$ .(a) What is the average cost function for the Cobb-Douglas model?
(b) If average cost is minimized when it is equal to the marginal cost, find the quantity x which yields the minimum average cost.?

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Definitions:

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A work arrangement where employees do not commute to a central place of work, instead working via electronic communications from a remote location, often their home.

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