3(a) Suppose that the firm’s production function is q = f(k,l), where k is the capital and 1 is the labour. If p, v, and w are the prices per units of output, capital, and labour, respectively, outline a method of deriving the firm’s profit function. (4 marks) 2 3(b) Define a linear homogeneous production function. Use a Cobb- Douglas linear homogeneous production function to demonstrate that slope of an isoquant depends only on the input proportions and not on the scale of output. (2 + 2 + 2 = 6 marks) 3(c) Explain carefully the link between the Lerner Index and the elasticity of demand. (6 marks

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