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2 votes
1 answer
691 views

Finding production given total cost (shephard's lemma)

Given a total cost function, for example, $$ C = q {w}^{3/4}{v}^{1/4} $$ and Shephard's Lemma, how do you find the underlying production function $q(k,l)$? For this example, Shephard's Lemma provides …
kleinerde's user avatar
  • 309
1 vote
1 answer
71 views

Maximizing profit with a simple probabilistic production function (basic practice problem)

A restaurant finds that less orders for their soup of the day are placed on warmer days so they discount the usual 7USD price to 5USD on warmer days. The cost of making the soup is given by $$ C = 0.1 …
kleinerde's user avatar
  • 309