1. Consider a firm that hires quantities x1 and x2 of inputs one and two, at...

1. Consider a firm that hires quantities x1 and x2 of inputs one and two, at prices w1 and w2. The production function is given by f(x1,x2) = x1x2.

1.1 Does the firm’s technology exhibits constant, decreasing, or increasing returns to scale?

1.2 Form the cost-minimization problem for this firm, find the associated first-order conditions, and the conditional demand functions.

1.3 Find the cost function for this firm. 1.4 Indicate whether this firm exhibits increasing, decreasing, or constant average total cost.

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Expert Solution

Rahul Sunny answered 1 year ago

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