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
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.9P
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