1/4 3/4 1. Suppose the total-cost function for a firm is given by C = qw" a. Use Shephard's lemma to compute the (constant output) demand functions for each input, k and 1. b. Calculate the average cost and marginal cost. c. Describe the returns to scale for the underlying production function for q.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.6P
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1. Suppose the total-cost function for a firm is given by C = qw
1/4 3/4
a. Use Shephard's lemma to compute the (constant output) demand functions for each input,
k and 1.
b. Calculate the average cost and marginal cost.
c. Describe the returns to scale for the underlying production function for q.
Transcribed Image Text:1. Suppose the total-cost function for a firm is given by C = qw 1/4 3/4 a. Use Shephard's lemma to compute the (constant output) demand functions for each input, k and 1. b. Calculate the average cost and marginal cost. c. Describe the returns to scale for the underlying production function for q.
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