7.(10) R Assignment. In the files folder, there is a data set called, HW4. This contains information on railroads and costs from 1983-2016. In the data, there is a variable called "cost", Iabrhrsc, fuelgal, fuelprce, laborprice, and rtm, and year. Cost is total firm costs {measured in millions), labrhrsc are labor hours (measured in millions}, fuelgal is gallons of fuel (measured in millions), fuelprce is the price per gallon of fuel, and laborprice is the price of labor per hour. In class, we have learned of the Diewert {or Generalize Leontief) Cost function, which is a flexible functional form. It is given generally as k k c(w,y) = yZZb'miwj. i=1 5:] Lil) Does this function satisfy linear homogeneity (homogeneous of degree 1} in factor prices. Explain ii.(2) What are the conditional factor demands? iii.(6) Using the railroad cost data, estimate a cost function by itself using OLS. Then estimate the cost function jointly with the factor demand equations but do not impose the cross-equation restrictions. Then estimate the same model and impose the restriction implied by theory