Discussion Post: Production Function
Suppose we have a production function,
q = K0.25 L0.25 S0.5
where S refers to the seating capacity of a restaurant which in the short run is fixed at S=100.
• What is the demand function for labor, L(q,v,w) and for capital, K(q,v,w)?
• What is the total cost function, C(v,w,q)?
• What is the supply function, q (P,v,w)?
• What is the profit function, P (P,v,w)?
• What is the demand function for labor, L(P,v,w) and for capital, K(P,v,w)?
• Find the homogeneity degree of profit function in prices?
• Show the profit function is convex in prices?
• Show the profit function is non-decreasing in price and non-increasing in each qi.
The response should include a reference list. Using double-space, Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.