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Milk or meat production Y per day is best explained by the inputs: feed needed per dayin kg , X 1 , and ( number

Milk or meat production Y per day is best explained by the inputs: feed needed per dayin kg, X1, and (number of) milk cows or calves, X2. Based on fitting the data for milk or meatproduction the revenue is modelled by a Cobb-Douglas function R(X1, X2)= pXa1 Xb2 constrainedby relation h(X1, X2)= c1X1+ c2X2= c3. For milk production, the constraint expresses a relationbetween the average sale price c3 of milk (per day), the average price c1 of a kg of feed and the pricec2 of a milk cow (cost per day and based on the annual cost of a milk cow). For meat production,the constraint expresses a relation between the average sale price c3 of meat (per day), the averageprice c1 of a kg of feed and the price c2 of a calf (cost per day and based on the annual cost of acalf). The parameters for the two cases have been established by linear regression of data to bethe following: regarding the milk case: p =445.69, a =0.346, b =0.542, c1=4.00, c2=1.36/d, c3=5.38;and, regarding the meat case: p =2.348, a =0.205, b =1.118, c1=4.00, c2=500.0, c3=6.02.(i) Consider the general case first (without substituting any parameter values). Determine theLagrangian. Find the FOCs, stationary point and analyse the bordered Hessian to classifythe critical point.

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