The Aggregate Demand Curve | Marginal Revolution University
The Aggregate Demand Curve | Marginal Revolution University
Apr 18, 2017
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The CES production function can be generalized to permit weighting of the inputs. In the two-input case, this function is q=f(k, l)=[(a k)^ρ (b l)^ρ]^γ / ρ a. What is the total-cost function for a firm with this production function? Hint: You can, of course, work this out from scratch; easier perhaps is to use the results from Example 10.2 and reason that the price for a unit of capital input in this production function is v / a and for a unit of labor input is w / b b. If γ=1 and a b=1, it
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