Given a firm has the production function

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Reference no: EM131165307

Given a firm has the production function:

F(K,L)=K^αL^β     
where   α+β=1

and the isocost line

C=wL+rK

a. Derive contingent factor demand L*(w,r,Q), K*(w,r,Q).

b. Derive (dk(w,r,Q))/dw, (dk(w,r,Q))/dr, (dk(w,r,Q))/dQ,

c.Classify the returns to scale of this production function.

d. Derive the cost function c(w,r,q) by plugging your factor demands from into the isocost line.

e. For r=4,w=1 and Q=100 what are the contingent factor demands for L and K and the cost of producing 100 units of C(4,1,100)?

Reference no: EM131165307

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