Question

1) (27 points) In this question we are going to plav with fxiX2)- a, where a>0. Throughout the question assume that wi-4, w-1. 8x1a+ x2 for different values of a. (6 points) Eor what values of a does the production fuuction exhibit increasing returos to scale? For what values does it exhibit constant returns to scale? Finallv for what values does it exbibit decreasing returns to scale? b. (7 points) Assume that a-1, so f(x) 8x1 X2. Draw the isoauant through the point (1,8). ClearlXiabel at least2 points on the isoquant. What is the costmi imzing、 combination of inputs to produce an outout of y-16? c. (7 points) Assume that a-0.5, so f(x)- 8x11/2 + X2. Draw the isoquant through the point (1,8). Cearbelabel at least2 points on thelsequant, whatis thecostminimizing combination of inputs to produce an outout of y-16? (7points) Assume thata-2, so f(x)=8x12 +X2 Draw the isoquant through the point z (1,8). Clearlv.label at least 2 points on the isoquant, What is thecostminimiziog combination of inputs to produce an outeut, of y-16? d.

Answer 1