Using a Lagrangian equation for a firm's cost minimization problem, you can solve for all of the following EXCEPT:
A) the optimal level of labor input.
B) the average cost of production.
C) the demand function for capital.
D) the equation for the expansion path.

Question

Quizplus · Accepted Answer

The Lagrangian equation in a firm's cost minimization problem is used to find the optimal combination of inputs (like labor and capital) that minimizes cost for a given level of output. It can help determine the optimal level of labor input (A), the demand function for capital (C), and the equation for the expansion path (D), which shows how input combinations change as output levels change. However, it does not directly provide the average cost of production (B), as average cost involves total cost divided by the quantity of output, which requires additional steps beyond the scope of the Lagrangian equation for cost minimization.

Using a Lagrangian Equation for a Firm's Cost Minimization Problem