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.

Expert Solution

Rahul Sunny answered 1 year ago

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