A firm in a competitive market has the production function y = x^a × x^b , where y is the
product and x1 og x2 are production factors.
Find the firm's supply and demand functions. Then show that
(i) The supply and demand functions are homogeneous of 0° in product and factor
prices.
(ii) The supply function is increasing in output prices and declining in factor prices.
(iii)The substitution matrix is symmetrical.
Find the firm's profit function.
Then show that
(iv) the profit function is homogeneous of 1° in prices.
(v) the profit function is increasing in product price and decreasing in factor prices.
(vi)Use Hotellings lemma to find the supply function and check that it is idendical to
the one found above.
谢谢