Question: Consider the following unit cost function 1n n In C(p) == 2 a; Inp; In p; with a;; = a ji i=1 j=1 where

Consider the following unit cost function 1n n In C(p) == 2 a; Inp; In p; with a;; = a ji i=1 j=1 where p; is the price of i-th input and a;;s are the coefficients. (i) C(p) is expected to be homogenous of degree-1, what conditions needs to be imposed on the coefficients to achieve the homogeneity property. (ii) The equation for share of each input in costs can be obtained using si ln C ln pi Find the equation for s;. (iii) Find the Hessian H = a In C In poln p; at point [P1,..., Pn] = [1,...,1].

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