A firm produces output according to the following production…
A firm produces output according to the following production function: q = 2 L1/2 + 4 K1/2 The price of labor is w = 20, the price of capital is r = 20 and there is a set-up cost F = 1,000 that the firm only pays if it decides to produce in the market. If the firm wants to produce ‘q’ units of output, solve the cost minimization problem. Obtain total cost C* (as a function of output level q). If the firm wants to produce 60 units of output, determine how much it will cost the firm.