A= 7 and B= 8

For this exercise replace 'A' with the last digit of your ASU ID# and 'B' with the second-to-last digit of your ASU ID#. Consider the following production function: y= [(A+ 1)ri+ (B+ 1)e;]7/8, where y > 0, 1>p>0) a. Determine the relationship between y and returns to scale. b. Define the cost-minimization problem, obtain the long-run input demand functions and the total cost function when wj = (A + 1) and w2 = (B + 1). c. Determine the relationship between y and both the average and marginal cost function. Explain briefly why this is consistent with your answer to (a). Exercise 4* (Optional): a*. Prove that if a production function exhibits constant returns to scale then it can be re-expressed as: y = f(21, 12) = hi(ni, c2) mi + fa(ri, 22) 12. Now consider the following production function: y= /(mm)= Prof -F ifrpof > F 0 Otherwise where y is output produced and F represents a quasi-fixed output cost. In other words, (y + F) can be reinterpreted as total production, but where the first F units are worthless and the rest y is useful. b. Prove that if o + # 2 1 then the function exhibits increasing returns to scale. **. Prove that if o + 8