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.?

Question

Quizplus · Accepted Answer

The Answer of 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.?

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