Question
Hello! I am given the producer cost minimization problem and I am having a really difficult time interpreting these questions. Can you please help? Thanks
Hello! I am given the producer cost minimization problem and I am having a really difficult time interpreting these questions. Can you please help? Thanks so much!!!
Consider Firm C who has a production function F(z1,z2) = z1+2z2 where the firm faces per unit prices of w1 and w2.
a) Does the production function have any returns to scale property?
b) What is firm's i's marginal rate of technical substitution?
c) What are all the bundles (z1,z2) with MRTS(z1,z2)=1? What are all bundles with MRTS(z1,z2)=4?
d) Suppose firm i faces input prices w1=w2=1. For target output level y>0, find the conditional factor demands z*1(y; 1,1) and z*2(y; 1,1)? What is the firm's corresponding long-run cost function Ci(y)=w1*z*1(y;1,1)+w2*z*2(y; 1,1)?
I would love your help determining these!!!
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