The company begins producing with k20 the cost of capital, Financial Management

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The company begins producing with k20 the cost of capital

ABC airline plans to hire workers to help its new service in NYC. Its production function is

ASM = L+2K

The company begins producing with K=20. The cost of capital is $0.1/unit. The wage depends on the amount of workers it employs. Specifically, w(L) = 2L.

a. Derive Alison's short-run cost function.

b. What is the shape of Alison's Marginal Cost.

c. If MR is 3ASM+560, how many labors it should hire?

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Financial Management: The company begins producing with k20 the cost of capital

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