A Firm Has a Production Function Described as Follows:"Weekly Output

question 77

Essay

A firm has a production function described as follows:"Weekly output is equal to the square root of the minimum of the amount of capital and the number of hours of labor used per week." Suppose that the cost of a unit of capital is r and the price of a unit of labor is w and the level of output is y.Write down the long-run total cost as a function of w, r, and y.

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Definitions:

Acid-test Ratio

A financial ratio that measures a company’s ability to pay off its short-term liabilities with its quick assets, offering insight into financial stability.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within a year or within the normal operating cycle of a business.

Current Liabilities

Debts or obligations of a company due within a fiscal year or the operating cycle, whichever is longer.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.