Let the production function be f(x1, x2, x3, x4) = min{x1, x2} + min{x3, x4}

| November 24, 2016

Let the production function be

f(x1, x2, x3, x4) = min{x1, x2} + min{x3, x4}

a) What is the factor of input demands when the price of the inputs are (1, 2, 3, 4)?

b) What is the cost function?

c) What kind of returns to scale does this technology exhibit?

Now suppose that the firm has a production function of the form

f(x1, x2, x3, x4) = min{x1 + x2, x3 + x4}

a) What is the factor of input demands for the new production function when the price of the inputs are (1, 2, 3, 4)?

b) What is the cost function for the new production function ?

c) What kind of returns to scale does this new production function technology exhibit?

Thank you very, very, very much for answering it!

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