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Let the production function of a firm is given as =( 0.5 + 0.5)2 Where and are inputs and is the price of input and is the priceof input .
a) Assume the firm has a limited budget to spend on buying input. Find the cost-conditional input demand function for each input.
b) Now, assume the firm has no budget restriction but it has aproduction quota. Find the output-conditional input demandfunction for each input.
c) Find the cost function of the firm.
d) Assume the firm has no budgetary or production restrictions and set up the profit maximization problem.
e) Write the conditions that need to be met to find a non-zero output that maximizes profits.
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