Suppose a rm\'s short-run production function is given by Q = 3 sqrt(L) , where L represents the number of hours of labor employed. The rm has a sunk cost of $500 and the wage rate is $18 per hour. What is the firm\'s short-run cost function? Solution Production function : Q = 3L1/2 We know that in short run some inputs are fixed and others are variables. Hence two types of costs incurred in short run that is fixed cost (fixed to all level of production) and variable cost (varies at different level of production). In general a short run cost function is : SRTC = Fixed Cost + Variable cost*output level. Hence the SRTC of the given firm would as follows: SRTC = 500 + 18(Q) SRTC = 500 + 18(3L1/2)..