Question: Question 9 (6 points) [6 marks] A firm uses two inputs to produce output; both inputs may be varied. Its production function is y =f(x1,x2)
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Question 9 (6 points) [6 marks] A firm uses two inputs to produce output; both inputs may be varied. Its production function is y =f(x1,x2) = '/2x1x2 where y is the output level and x1 and x2 are two inputs that the firm is using. The prices of input 1 is $1 per unit and the price of input 2 is $2 per unit. The firm wishes to minimize its cost, 1. [4 marks] Use Lagrangian method to derive firm's long-run conditional factor demands for input 1 and input 2. 2. [2 marks] What combination of inputs minimizes total cost of producing 100 units of output? What is the total cost of producing 100 units of output
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