1053 Microeconomics 1 3. Brighton Pier Ice Cream Ltd sells ice cream on the Brighton pier. To produce ice cream, the com

[answerhappygod]

1053 Microeconomics 1 3 Brighton Pier Ice Cream Ltd Sells Ice Cream On The Brighton Pier To Produce Ice Cream The Com 1 (137.39 KiB) Viewed 89 times

1053 Microeconomics 1 3. Brighton Pier Ice Cream Ltd sells ice cream on the Brighton pier. To produce ice cream, the company needs capital (one or more ice cream making machines, K), and labour (workers to run the machine, L). Its production function for scoops of ice cream is f(KL) = K0.5 0.5 The cost of renting an ice cream machine is r = £50, and the cost of a worker for one day is W = £50 a. What is the marginal product of labour (MPL)? What is the marginal product of capital (MPL)? [5 marks] b. What is the total cost function? [5 marks] C. Brighton Pier Ice Cream Ltd would like to produce 50 scoops of ice cream. Using the Lagrange method to solve the firm's cost minimisation problem, carefully set out the first order conditions and derive the number of units of K and L that produce 50 units of ice cream with the lowest cost [15 marks] d. Ice cream sells for £5 per scoop. Is this business profitable? [5 marks] END OF PAPER o w SUS