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Advanced Mathematical Economics

29/01/2021 Client: werewak439 Deadline: 6 Hours

 Consider a firm which purchases inputs x= (x1, x2, x3)   in competitive markets at prices w = (w1, w2, w3) . This firm’s production function is y = x1, x2, x3).

a. Is this firm facing: constant, increasing, decreasing, or indeterminate returns to scale? Explain

b. Derive the conditional factor demand equation for input x2 .

c. If in the time period considered the amount of input x3   if fixed at x3, then is the cost function c(w,y)  homogeneous in w?


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