A Firm Has the Production Function F(x₁, X₂) = X⁰

question 45

Multiple Choice

A firm has the production function f(x₁, x₂) = x^0.60₁x^0.30₂. The isoquant on which output is has the equation

• A) x₂ = 80x^-2₁.
• B) x₂ = 80x^3.33₁.
• C) = 2.
• D) x₂ = 80x^-0.30₁.
• E) x₁ = 0.30x^-0.70₂.

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Definitions:

Competitive Markets

Markets characterized by many buyers and sellers, free entry and exit, and products that are close substitutes, leading to price taking behavior.

Equilibrium Level

A state in a market where supply equals demand, resulting in stable prices and quantities where no economic forces are compelling a change.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor, such as labor or capital.