Suppose a perfectly competitive firm's production function is q = ...

[Davideckstein7]

Suppose a perfectly competitive firm's production function is q = L0.2K0.6 and it takes the wage and price as given. Then the firm's long-run demand for labor as a function of K, w, and p is
 
  A) p5((0.2/w)2(0.6/r)3).
  B) p5((0.2/w)4(0.6/r)5).
  C) p5((0.2/w)5(0.6/r)4).
  D) p5((0.2/w)3(0.6/r)2).

Question 2

If a firm's marginal costs ________ then its ________.
 
  A) fall; best-response curve shifts
  B) rise; forced out of the oligopoly
  C) rise; output increases
  D) fall; price falls

[Kaytorgator]

Answer to Question 1

A

Answer to Question 2

A