Suppose that the total cost function for a firm is given TC (r,w,q) = (0.5r + r0.5w
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Question:
Suppose that the total cost function for a firm is given
TC (r,w,q) = (0.5r + r0.5w
0.5 + 0.5w) q
Where r and w denote the prices of capital and labor and q denotes the output. Use the
Shepherd's Lemma to derive the firm's conditional demand functions for labor and capital.
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