3.Assume that a firm which produces an output according to the following function isattempting to cost minimize in the long run.q=f(K, L) = (.5K¹/2 + .5L¹/2)¹/2a. Without solving the problem mathematically, set up the equation for scale elasticityand explain how you would use it to check whether this production function exhibitsincreasing, decreasing, or constant returns to scale.b.Compute this firm's cost minimizing (quantity constant) input demand functions.C.What are the firm's total cost and supply functions.d.Assuming K is fixed at 36, what is the firm's short run cost function?Assuming the firm is operating in a competitive market with a market price of P,e.In the profit maximizing optimization, what do the first order conditions and secondorder conditions ensure?f.Compute this firm's profit maximizing demand functions for K and L.g.What three functions can be derived using the profit function? And how?

Given production function q=f(K,L)=(0.5K12+0.5L12)12 Price of labor=WPrice of capital=r

3. Assume that a firm which produces an output according to the following function is attempting to cost minimize in the long run. q= f(K, L) = (.5K¹/2 + .5L¹/2)1/2 a. Without solving the problem mathematically, set up the equation for scale elasticity and explain how you would use it to check whether this production function exhibits increasing, decreasing, or constant returns to scale. b. Compute this firm's cost minimizing (quantity constant) input demand functions. What are the firm's total cost and supply functions

3. Assume that a firm which produces an output according to the following function is attempting to cost minimize in the long run. q= f(K, L) = (.5K¹/2 + .5L¹/2)1/2 a. Without solving the problem mathematically, set up the equation for scale elasticity and explain how you would use it to check whether this production function exhibits increasing, decreasing, or constant returns to scale. b. Compute this firm's cost minimizing (quantity constant) input demand functions. What are the firm's total cost and supply functions

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.9P

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