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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 X and number of milk cows or calves, X Based on fitting the data for milk or meatproduction the revenue is modelled by a CobbDouglas function RX X pXa Xb constrainedby relation hX X cX cX c For milk production, the constraint expresses a relationbetween the average sale price c of milk per day the average price c of a kg of feed and the pricec 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 c of meat per day the averageprice c of a kg of feed and the price c 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 a b c cd c;and, regarding the meat case: p a b c c ci 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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