1. Cost minimization: theoretically, an alfalfa producer would like to minimize their costs of producing any amount of alfalfa, q, by selecting the amount of labor, x1, fertilizer, x2, and equipment, 23. Technically efficient production requires q = 10x0.5x2x2. (a) [ What are the marginal products of labor and fertilizer? (b) [ What are the output elasticities? (c) (d) What is the elasticity of scale? s Suppose the per-unit fertilizer cost equals that for equipment (w2w3). Define the cost function in terms of the cost of labor, w₁, the cost of fertilizer, w2, the cost of equipment, w3, and the output, q- (e) I Find 1, 2, and c when w₁ = 1, W2 = w3 = 2, and q = 20.
1. Cost minimization: theoretically, an alfalfa producer would like to minimize their costs of producing any amount of alfalfa, q, by selecting the amount of labor, x1, fertilizer, x2, and equipment, 23. Technically efficient production requires q = 10x0.5x2x2. (a) [ What are the marginal products of labor and fertilizer? (b) [ What are the output elasticities? (c) (d) What is the elasticity of scale? s Suppose the per-unit fertilizer cost equals that for equipment (w2w3). Define the cost function in terms of the cost of labor, w₁, the cost of fertilizer, w2, the cost of equipment, w3, and the output, q- (e) I Find 1, 2, and c when w₁ = 1, W2 = w3 = 2, and q = 20.
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Transcribed Image Text:1. Cost minimization: theoretically, an alfalfa producer would like to minimize their costs of producing
any amount of alfalfa, q, by selecting the amount of labor, x1, fertilizer, x2, and equipment, 23.
Technically efficient production requires q =
10x0.5x2x2.
(a) [
What are the marginal products of labor and fertilizer?
(b) [
What are the output elasticities?
(c)
(d)
What is the elasticity of scale?
s Suppose the per-unit fertilizer cost equals that for equipment (w2w3). Define the cost
function in terms of the cost of labor, w₁, the cost of fertilizer, w2, the cost of equipment, w3, and
the output, q-
(e) I
Find 1, 2, and c when w₁ = 1, W2 = w3 = 2, and q = 20.
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