Problem: A firm has the production function:
q = KL + L
where q is output and K and L are quantities of two inputs.
(1) Derive the firm's expansion path.
(b) Explain what the expansion path tells us. For example, what happens to make the firm move along its expansion path?
(c) Indicate how you would proceed to derive the conditional factor demands for K and L. (You do not need to actually derive them.)
(d) Explain whether or not this firmâ??s production technology is homothetic. Give your reasoning(s).