Quiz 14 Cost Minimization

# Quiz 14 Cost Minimization - are w 1 = \$1 and w 2 = \$2 Draw...

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Shomu Banerjee ECON 201 COST MINIMIZATION Suppose a firm has a production function: y = [min{ x 1 , 3 x 2 }] 1/2 where y is the output and x 1 and x 2 are inputs. (a) What is the returns-to-scale for this production function? (b) In the graph below, an isoquant for y = 3 is shown. The prices of the inputs
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Unformatted text preview: are w 1 = \$1 and w 2 = \$2. Draw the isocost line corresponding to an expenditure of \$12. (c) What is the cost-minimizing expenditure for y = 3? (d) Calculate the cost function c ( w 1 , w 2 , y ). 10 15 5 10 x 2 5 x 1...
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