A firm’s technology possesses all the usual properties. It produces output using three inputs, with
conditional input demands xi(w1, w2, w3, y), i = 1, 2, 3. Some of the following observations are
consistent with cost minimisation and some are not. If an observation is inconsistent, explain why. If
it is consistent, give an example of a cost or production function that would produce such behaviour.
(a) ?x2/?w1 > 0 and ?x3/?w1 > 0.
(b) ?x2/?w1 > 0 and ?x3/?w1
(c) ?x1/?y
(d) ?x1/?y = 0.
(e) ?(x1/x2)/?w3 = 0.