Question 2 (Profit Maximization for CES Production Function) Suppose a firm's production function is (, ) = 1 4 + 1 4. For part (c), (d), (g), and (h), do not show math. Just say increasing, decreasing, or constant.

(a) Write down the firm's cost-minimization problem.

(b) Find the contingent demand functions for capital and labor.

(c) Is contingent demand for capital increasing, decreasing, or constant in 0? In ? In ?

(d) Is contingent demand for labor increasing, decreasing, or constant in 0? In ? In ?

(e) Write down the firm's profit in terms of and (and parameters , , and ).

(f) Find the unconditional demand functions for capital and labor.

(g) Is unconditional demand for capital increasing, decreasing, or constant in ? In ? In ?

(h) Is unconditional demand for labor increasing, decreasing, or constant in ? In ? In ?