# Consider the following unit cost function lnC(p)=21i=1nj=1naijlnpilnp.pdf

A

Consider the following unit cost function lnC(p)=21i=1nj=1naijlnpilnpjwithaij=aji where pi is the price of i th input and aijs are the coefficients . (i) C(p) is expected to be homogenous of degree-1, what conditions needs to be imposed on the coefficients to achieve the homogeneity property. (ii) The equation for share of each input in costs can be obtained using si=lnpilnC. Find the equation for si. (iii) Find the Hessian H=[lnpilnpj2lnC] at point [p1,,pn]=[1,,1]..

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### Consider the following unit cost function lnC(p)=21i=1nj=1naijlnpilnp.pdf

• 1. Consider the following unit cost function lnC(p)=21i=1nj=1naijlnpilnpjwithaij=aji where pi is the price of i th input and aijs are the coefficients . (i) C(p) is expected to be homogenous of degree-1, what conditions needs to be imposed on the coefficients to achieve the homogeneity property. (ii) The equation for share of each input in costs can be obtained using si=lnpilnC. Find the equation for si. (iii) Find the Hessian H=[lnpilnpj2lnC] at point [p1,,pn]=[1,,1].
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