Consider the following profit function that has been obtained from technology that uses a single input
π(P.W)=P^2W^b . Where P is the output price and W is the input price and b is parameter value
a) For which values of b the profit function is a real profit function with all of the appropriate properties?
b) Calculate the supply function of the product and the demand for inputs
a) The profit function is a real profit function with all of the appropriate properties when b is greater than or equal to 0.
b) The supply function of the product is P = (π/W^b)^(1/2). The demand for inputs is W = (π/P^2)^(1/b).