Suppose that you are given a cost function c(w,r,x)=2w^1/2r^1/2x^3/2 where w is the wage rate for labor, r is the rental rate of capital and x is the output level.
a.Does the production process that gives rise to this cost function have increasing, decreasing or constant returns to scale?
b.Derive the marginal cost function.
c.Calculate the supply function for the firm - i.e.the function that tells us for every combination of input and output prices, how much the firm will optimally produce.How does output by the firm change as input and output prices change?
d.If the cost function had been c(w,r,x)=2w^1/2r^1/2x^1/2 instead, how would your answer to (c) change? How can that make any sense?

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The Answer of Suppose that you are given a cost function c(w,r,x)=2w^1/2r^1/2x^3/2 where w is the wage rate for labor, r is the rental rate of capital and x is the output level. a.Does the production process that gives rise to this cost function have increasing, decreasing or constant returns to scale? b.Derive the marginal cost function. c.Calculate the supply function for the firm - i.e.the function that tells us for every combination of input and output prices, how much the firm will optimally produce.How does output by the firm change as input and output prices change? d.If the cost function had been c(w,r,x)=2w^1/2r^1/2x^1/2 instead, how would your answer to (c) change? How can that make any sense?

Suppose That You Are Given a Cost Function C(w,r,x)=2w1/2r1/2x3/2 Where

Suppose That You Are Given a Cost Function C(w,r,x)=2w^1/2r^1/2x^3/2 Where