Please do not copy other answers answers as they are wrong. Please answer it correctly
Posted: Thu May 19, 2022 8:40 am
Please do not copy other answers answers as they are wrong. Please
answer it correctly
Question 2 (16 marks] Consider a firm that uses labour and capital as inputs for production accord- ing to some production technology y = f(KL). Let c(y, w,r) be the cost of producing y units of output if the wage rate is w and the cost of capital is r. Let L* and K* be the optimal capital and labour demand for producing y units. Prove that ac(y, w,r) ac(y, w,r) L* and = K* aw ar
answer it correctly
Question 2 (16 marks] Consider a firm that uses labour and capital as inputs for production accord- ing to some production technology y = f(KL). Let c(y, w,r) be the cost of producing y units of output if the wage rate is w and the cost of capital is r. Let L* and K* be the optimal capital and labour demand for producing y units. Prove that ac(y, w,r) ac(y, w,r) L* and = K* aw ar