Microeconomics

4. (16 points) Given the longrun total cost anction: mg) = 22%\

4. (16 points) Given the long-run total cost function: TC(Q) = Q2r1/2w1/2, where wis the wage, and ris the rental rate. (a). By studying the total cost function, determine whether the underlying production function exhibits increasing return to scale, constant return to scale, or decreasing return to scale, and explain the reason. (b). Use the Shephard's Lemma to find the factor demand functions L* (Q, w, r), r (Q, w, r). (c). Finally, recover the underlying production function Q = F L).