Suppose That a Particular Good, Y, Is Produced According to the Following

question 68

Multiple Choice

Suppose that a particular good, y, is produced according to the following production function y = min(ax₁,bx₂) where x₁ and x₂ are inputs, and a and b are positive constants. Suppose further that x₁/x₂ currently equals b/a. Then:

• A)an additional unit of x₁ or x₂ will not increase output.
• B)the current ratio of input- usage is technically inefficient.
• C)if a > b, the production of any output level requires more x₁ than x₂.
• D)an additional unit of x₁ will increase output.

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Definitions:

Barriers to Entry

Factors that make it difficult for new firms to enter a market, including high startup costs, strict regulations, and existing competition.

Channels of Distribution

The paths or routes through which goods and services flow from the producer to the consumer or end user.

Herbert Simon

was an American economist and cognitive psychologist known for his contributions to decision-making theory and artificial intelligence.

Nobel Laureate

An individual who has been awarded the Nobel Prize, recognizing outstanding contributions to humanity in fields such as literature, peace, economics, medicine, and science.