The production technology is fully characterized

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Reference no: EM13688127

Suppose that the production technology is fully characterized by the Cobb-Douglas
production function q = f (L,K) = ALαKβ with α+β < 1 and A,α,and β all greater than zero.
MPL = AαLα-1Kβ and MPK = AβLαKβ-1 .
(a) Does this production process have increasing, decreasing or constant returns to scale?
(b) Set up the cost minimization problem and solve for the conditional labor and capital demands.
(c) Derive the cost function and simplify the function as much as you can.

Reference no: EM13688127

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