1. Juan Valdez owns a coffee farm in Colombia. His production function is: f(x1, x2) = (x1 – 1)0.25 9-5. Assume the price of input 1 is r and the price of input 2 is w.. (a) Write down an expression for the technical rate of substitution. (b) Find Juan's demand for inputs conditional on the quantity y of coffee Juan wants to produce. (c) Find Juan's cost function. (d) What is the supply function of Juan's firm?
1. Juan Valdez owns a coffee farm in Colombia. His production function is: f(x1, x2) = (x1 – 1)0.25 9-5. Assume the price of input 1 is r and the price of input 2 is w.. (a) Write down an expression for the technical rate of substitution. (b) Find Juan's demand for inputs conditional on the quantity y of coffee Juan wants to produce. (c) Find Juan's cost function. (d) What is the supply function of Juan's firm?
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.3P
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