1. The production function of a firm is F(K, L) = KL. The firm can buy inputs (K, L) at competitive prices wk and wl. a) What returns to scale have the firm's production function? b) State the long-run cost minimization problem. c) What is the long-run compensated demand function for each input? d) What is the firm's long-run total cost function In the short-run the firm can only hire K = 4 units of capital. e) State the short-run cost minimization problem. f) What is the short-run compensated demand function for each input? g) What is the firm's short-run total cost function h) How does the short-run and long-run total cost function compare to each other? i) For which input prices (wk, wL) and desired quantity q they are the same?

1. The production function of a rm is F(K, L) = V K L. The rm can buy inputs (K, L) at competitive prices on, and wit. a) What returns to scale have the rm's production function? 13) State the longrun cost minimization problem. (3) What is the long-run compensated demand function for each input? d) What is the rm's tong-run total cost function In the short-run the rm can only hire K = 4 units of capital. e) State the shortrun cost minimization probiem. f) What is the shortrun compensated demand function for each input? g) What is the rm's shortran total cost function h) How does the shortrun and longrun total cost function compare to each other? i For which input prices (10;;ij ) and desired quantity or they are the same