Question: Given: w = 2, r =3, q = 100 First production function: q = L^0.75(K^0.2) Second production function: q = L^0.75(K^0.5) 1) How is the

Given:

w = 2, r =3, q = 100

First production function: q = L^0.75(K^0.2)

Second production function: q = L^0.75(K^0.5)

1) How is the cost function graphs of the first and second production function differ? Which variable is responsible for generating this difference? Note! Explain using the isocosts (became steeper or less steep)

2) What can you deduce about cost functions derived from Cobb-Douglas production functions?

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