Number of labor-hours spent squeezing them

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Fifth Problem Earl sells lemonade in a competitive market on a busy street corner in Philadelphia. His production function is f(x1, x2) = x 1/3 1 x 1/3 2 , where output is measured in gallons, x1 is the number of pounds of lemons he uses, and x2 is the number of labor-hours spent squeezing them. 1. Does Earl have constant returns to scale, decreasing returns to scale, or increasing returns to scale? 2. If he is going to produce y units in the cheapest way possible, what is the number of pounds of lemons he will use? How many hours of labor he will use? 3. What is the cost of producing y units at factor prices w1 and w2?

Reference no: EM131090767

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