IMPORTANT: The owner chooses to adopt a new technology that changes the cost function to C(q)=4q^2+2q+64. All the competitors follow her lead and choose to adopt the same technology and have the same cost function. They are all price-takers. From now on, use this cost function. What is the short-run shutdown price, the price below which the firm chooses to shut downproduction?41 A firm faces a production function with inputs capital (K) and labor (L):F(K, L) =K¹/2 L¹/4=The amount of capital used for production is determined at the beginning of the year.The prices of K and L are v and w respectively.

Shut Down price: In the short run as the firm faces the total fixed cost as well. And a firm will…

Answered: What is the short-run shutdown price,…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 1.5CE

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IMPORTANT: The owner chooses to adopt a new technology that changes the cost function to C(q)=4q^2+2q+64. All the competitors follow her lead and choose to adopt the same technology and have the same cost function. They are all price-takers. From now on, use this cost function.

What is the short-run shutdown price, the price below which the firm chooses to shut down
production?
4
1

A firm faces a production function with inputs capital (K) and labor (L):
F(K, L) =
K¹/2 L¹/4
=
The amount of capital used for production is determined at the beginning of the year.
The prices of K and L are v and w respectively.

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