Formulate the firms cost minimization problem

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Question: Consider a firm with the production function f (k, l) = 4l^(1/2) + 6k^(2/3) who faces input prices w = 3 and v = 6.

1 Is the production function concave? Does it exhibit decreasing returns to scale? Prove your answers.

2 Formulate the firm's (long-run) cost minimization problem. Do you agree that contingent input demands must be strictly positive whenever q > 0? Prove and explain your answer. Use the tangency condition to derive a relationship between k and l. Depict the firm's expansion path in a figure.

Solve the firm's (long-run) cost minimization problem [Hint: you may recognize that you can write a key condition as a quadratic equation]. Are the contingent input demands concave or convex in q? Prove your answer. Is the cost function concave or convex in q? Explain your answer and how it relates to your answer to 2.1. Can you tell whether marginal costs or average costs are higher? Explain your answer

Reference no: EM133442317

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