Problem
Imagine you work for a firm that only utilizes labor and capital as inputs and has a CES production function:
q = f (L,K) = 2L2 + K2
What is the MPL? What does this mean economically?
What is the MPK? What does this mean economically?
What is the RTS? What does this mean economically?
Does this CES function have constant, increasing, or decreasing returns to scale?
Write the profit in terms of this production function and the associated standard cost function.
What is the short run supply function if this firm is a price taker?
What is the derived labor demand for the firm?
What is the price elasticity of supply? What does this mean economically?
How does supply shift when the amount of capital employed changes?
How does derived labor demand change when the price of labor changes?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.