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A firm uses capital k and labor l to produce an output q. The production function of the firm is given by q= F(k,
A firm uses capital k and labor l to produce an output q. The production function of the firm is given by q= F(k, l) = k/61/6 (i) If the price of capital and labor is Wk = 4 and we = 1 respectively, compute the cost function C(q). (ii) Now compute the cost function if the prices of capital and labor are 3 and 3 respectively. (iii) In which case are costs of production higher? Explain your answer.
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