Answer:
[tex] STC = 20K + 25L = 20*5 + 25*[\frac{Q^2}{25}] = 100 + Q^2 [/tex]
Explanation:
We are given:
K units of capital and L units of labor.
•Each unit of capital cost = 20
• Each unit of labor cost =25
• Level K is fixed at 5 units
We are told production function Q = K√L
Using the production functions and the values given, we can get that Q=5√L.
To find Q, the amount of labor will be given as:
[tex]L = \frac{Q^2}{25} [/tex]
Therefore, the Short run total cost function (STC) will be:
[tex] 20K + 25L = 20*5 + 25[\frac{Q^2}{25}] = 100 + Q^2 [/tex]
