Consider a firm with 1 input and 1 output and a production function given by f(x) = x1α with α < 1. The cost of the input is c and the price of the output is p. Write down the profit function and the first-order conditions associated with profit maximization. Find the factor demand, x*(p, c), the supply function, q*(p, c), and the profit function, π*(p, c).

Consider a firm with 1 input and 1 output and a production function given by f(x) = x1α with α < 1. The cost of the input is c and the price of the output is p. Write down the profit function and the first-order conditions associated with profit maximization. Find the factor demand, x(p, c), the supply function, q(p, c), and the profit function, π*(p, c).

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.3P

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