- #1
dracolnyte
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Homework Statement
Consider the following general form of a constant elasticity of substitution production function:
y = [SLp + (1 - S)Kp]1/p
Assume a firm is trying to minimize the cost of producing any given y. Cost are given by
C = wL + rK
Find the firm's cost minimizing demand function for L. The cost minimizing demand for K is determined simultaneously, so you need both first order conditions. You may assume that nonneggativity constraints on L and K are not binding.
The Attempt at a Solution
Is y = [SLp + (1 - S)Kp]1/p expandable?