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consider a firm with a production function f (z1, Z2) = 21$ 22 (i) Does this production function exhibit increasing, decreasing, or constant returns to
consider a firm with a production function
f (z1, Z2) = 21$ 22 (i) Does this production function exhibit increasing, decreasing, or constant returns to scale? Is the production function homoge- neous in (21, 22) and, if so, to what degree? (5 marks) (ii) Find the firm's conditional input demand functions and the cost functions. (10 marks) (iii) Set up the profit maximisation problem, either directly from the production function or from the cost function that you found in the previous part, and find the first order conditions for profit maximisation. Solve the first order conditions and find the profit maximising output supply and input demand. (10 marks)Step by Step Solution
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