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Question: Consider the technology represented by y = (x₁)^0.4 (x₂)^0.6. The marginal products are MP₁ = 0.4/x₁ and MP₂ = 0.6/x₂. We now consider the problem of cost minimization.

a. Write the problem of cost minimization. Interpret.

b. What is the condition that the optimal choice of inputs has to satisfy? Interpret.

c. Obtain and interpret the cost-minimizing optimal demand functions for the two inputs.

d. Obtain and interpret the optimal cost function.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M92598762

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