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What are the short-run AVC and ATC functions

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January 4th, 2018

Peter’s Pan Factory faces the production function q=10√LK . Labor costs are $10 per hour of labor, while capital costs are $100 per hour. In the short run, however, capital is fixed at K = 100 units.a. What are the short-run AVC and ATC functions? Hint: Costs are a function of the level of output produced so your functions should be in terms of Q.b. What is the short-run MC function?

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