Question: A company has a production function given by f(x1,x2) = x a 1 x b 2 , which is a convex production set. Given factor

A company has a production function given by f(x1,x2) = xa1xb2, which is a convex production set.

Given factor prices w1, w2 > 0 and output price p > 0, set up the profit maximization problem. Derive expressions for the optimal x1 and x2 as

a function of output price, factor prices, and output, q. Use these factor demand

equations to express the company's supply function - i.e. q as a function of output price

and factor prices.

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