Let f(x1, x2) = (min{x1 − x1})α1(min{x2 − x2})α2 where x1, x2 > 0 are interpreted as minimum requirements of inputs needed for thefirm to operate, and α1, α2 > 0, with α1 + α2 = β < 1. Draw some isoquants, and obtain the cost function and the conditional demands for inputs. min {x-xbar} means {0, x-bar}
Let f(x1, x2) = (min{x1 − x1})α1(min{x2 − x2})α2 where x1, x2 > 0 are interpreted as minimum requirements of inputs needed for thefirm to operate, and α1, α2 > 0, with α1 + α2 = β < 1. Draw some isoquants, and obtain the cost function and the conditional demands for inputs. min {x-xbar} means {0, x-bar}
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.7P
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Let f(x1, x2) = (min{x1 − x1})α1(min{x2 − x2})α2
where x1, x2 > 0 are interpreted as minimum requirements of inputs needed for thefirm to operate, and α1, α2 > 0, with α1 + α2 = β < 1. Draw some isoquants, and obtain the cost function and the conditional
min {x-xbar}
means {0, x-bar}
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