Suppose a firm is producing concrete with the Cobb Douglas production function:
c = s0.4g0.6
c = pounds of concrete, s = pounds of cement, g = pounds of gravel
it wants to produce 10,000 pounds of concrete. Concrete is $10/pound and gravel is $2/pound
What is the firm's cost minimizing input mix? What is the firms total and average cost?
If gravel rises to $4/pound, which direction will the isoquant and isocost curve shift and what will be the new level of cost?