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A firm has the following production function for producing z , using inputs x and y : Z(x,y) = (x^2 + 3a) (y^2 + b)
A firm has the following production function for producing "z" , using inputs x and y : Z(x,y) = (x^2 + 3a) (y^2 + b)
The firm must minimize its cost given as: T(x,y) = cx + dy, where $c is unit price of x and $d is e unit price of y .
a) Format the Lagrangian for the firm's optimization problem and derive the first order conditions.
b) Provide brief economic interpretation about the elasticity of substitution.
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