2. A firm combines two inputs 21 and 22 to produce an output y. The prices of the two inputs are wi and w2, while the price of output is p. To produce an amount of output equal to y, the firm spends the following amount (which depends on the input prices): C (ur., 12., 1) — (1) · [(;)* + (-) ¯**] с • Is it possible that the firm is minimizing cost when producing q? Explain • ( 11 ) ਕਮਰ (102) ਕਵਿਤ . If the answer to the previous question is positive, can you compute the conditional input demand functions? • How do your previous answers change if w₁ and we simultaneously double?
2. A firm combines two inputs 21 and 22 to produce an output y. The prices of the two inputs are wi and w2, while the price of output is p. To produce an amount of output equal to y, the firm spends the following amount (which depends on the input prices): C (ur., 12., 1) — (1) · [(;)* + (-) ¯**] с • Is it possible that the firm is minimizing cost when producing q? Explain • ( 11 ) ਕਮਰ (102) ਕਵਿਤ . If the answer to the previous question is positive, can you compute the conditional input demand functions? • How do your previous answers change if w₁ and we simultaneously double?
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.9P
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Question
Transcribed Image Text:2. A firm combines two inputs 21 and 22 to produce an output y. The prices of the two inputs are wi
and w2, while the price of output is p. To produce an amount of output equal to y, the firm spends
the following amount (which depends on the input prices):
() ()
248
+
. Is it possible that the firm is minimizing cost when producing q? Explain
C (w₁, W2, y) = (y) ats
48
A
(w₁) ars. (W₂) a+s
. If the answer to the previous question is positive, can you compute the conditional input demand
functions?
• How do your previous answers change if w₁ and we simultaneously double?
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