Economics A competitive firm produces a commodity using capital ???? and labor ???? according to the production function ???? = ????(????, ????) = (???? − 4) 1/4???? 1 /4 The price of capital is ????, and the price of labor is ???? . a. What are the conditional factor demand functions for ???? and ????? b. What is the cost function that minimizes the cost of producing ???? at prices ???? and ????? What is average cost? What is marginal cost? c. Assume now that the price of capital is ???? = 2, the price of labor is ???? = 1, and the firm has a contract to produce ???? = 100 units of output. Find the cost-minimizing levels of capital and labor. Find the minimum cost of producing 100 units of the good. d. Verify Shephard’s lemma for the inputs ???? and ????
