Reference no: EM131163345
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)?
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