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2. The production function of a firm is given by f ( K, L) = AK-LB and factor prices for the inputs capital K and
2. The production function of a firm is given by f ( K, L) = AK-LB and factor prices for the inputs capital K and labour L are r and w, respectively. The price of output is p. (a) Using the Lagrangian approach for profit maximization, show that the firm's cost func- tion is C(q) = B(qra WB) 1/(a+B) where B = A-1/ (atB) [ ( B/ a ) a/ (atB) + ( a/ B)B/(atB)]
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