A firm uses two factors of production. Its production function iswhere A1and A2are quantities of factors 1 and 2 and x is the output.

a) In the short run A2= 100

1)Derive the equations for average and marginal products for the other factor

2)Over what ranges of output does the firm experience diminishing average and marginal products of factor 1?

b) Repeat question a) treating A2as an arbitrarily given constant.

c) Both factors are now variable. Derive the equation of Marginal Rate of Technical Substitution of factor 1 for factor 2

d) If the price of factor 1 is 1 and the price of factor 2 is 4, derive an equation in the form A1= f(A2) for the firm's expansion path.

e)Along the expansion path of d) calculate the ranges of output for which the firm experiences increasing , decreasing and constant returns to scale.

f) Are the answers to e) dependent on input prices.

g) Derive the equation in the form A1= f(A2) when x = 1350

h) Calculate the firm's maximum possible output

i) Assume that the prices of factors 1 and 2 are 4.44 and 9.99 respectively and output price is 0.12. The firm is a profit maximizer. Calculate 1) the

amount of factors used 2) the amount of output produced 3) the firms profit

j)Let x = 4y and A1= 4a1and A2= 4a2. The write the production function in terms of y, a1and a2

k)) Return to the original production function. Assume that the price of both factors is 10. The firm's expenditure on the two factors is 320. What is the maximum possible output?

l) With prices and expenditure as in k), suppose that the firm has to buy 22 units of factor 1, what is then the maximum output?