Juan Valdez owns a coffee farm in Colombia. His production function is: f(x1,x2)=(x1−1)^0.25 x2^0.5 Assume the price of input 1 is r and the price of input 2 is w. (a) Write down an expression for the technical rate of substitution. (b) Find Juan's demand for inputs conditional on the quantity y of coffee Juan wants to produce. (c) Find Juan's cost function. (d) What is the supply
Juan Valdez owns a coffee farm in Colombia. His production function is: f(x1,x2)=(x1−1)^0.25 x2^0.5 Assume the price of input 1 is r and the price of input 2 is w. (a) Write down an expression for the technical rate of substitution. (b) Find Juan's demand for inputs conditional on the quantity y of coffee Juan wants to produce. (c) Find Juan's cost function. (d) What is the supply
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.5P
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Juan Valdez owns a coffee farm in Colombia. His production function is:
f(x1,x2)=(x1−1)^0.25 x2^0.5
Assume the price of input 1 is r and the price of input 2 is w.
(a) Write down an expression for the technical rate of substitution.
(b) Find Juan's demand for inputs conditional on the quantity y of coffee Juan wants to produce.
(c) Find Juan's cost function.
(d) What is the supply function of Juan's firm?
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