3. Consider a firm that produces a single output Q using two inputs, q₁ andproduction technology is the Cobb-Douglas:Q = 9tq².2 -Let pi be the price of q1, and p2 be the price of q2. Assume that the price of the outputQ is 1.(b)Find the effect of an input price p2 change on the optimal quantity, q2, ofthe input good 2 using the implicit function theorem.

When we have a function like: f(x,y) = d ; where x and y expresessions are un separable (which…

3. Consider a firm that produces a single output Q using two inputs, 9₁ and 92. The production technology is the Cobb-Douglas: Let pi be the price of q₁, and p2 be the price of q2. Assume that the price of the output Q is 1. (b) Find the effect of an input price p2 change on the optimal quantity, 92, of the input good 2 using the implicit function theorem.

3. Consider a firm that produces a single output Q using two inputs, 9₁ and 92. The production technology is the Cobb-Douglas: Let pi be the price of q₁, and p2 be the price of q2. Assume that the price of the output Q is 1. (b) Find the effect of an input price p2 change on the optimal quantity, 92, of the input good 2 using the implicit function theorem.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.2P

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