Quiz 16 Cost Minimization3

Quiz 16 Cost Minimization3 - Shomu Banerjee ECON 201 COST...

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Shomu Banerjee ECON 201 COST MINIMIZATION #3 Suppose a firm has a production function: y = 1 x 2 = x 1 1/2 x 2 1/2 where y is the output and x 1 and x 2 are inputs. The marginal productivity for the inputs is given by MP 1 = x 2 1/2 2 x 1 1/2 and MP 2 = x 1 1/2 2 x 2 1/2 . (a) Calculate the firm’s technical rate of substitution. (
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