A Firm Has Production Function F (X1, X2, X3, X4)

question 33

Multiple Choice

A firm has production function f (x1, x2, x3, x4) =min{x1, x2} + min{x3, x4}. This firm faces competitive factor markets where the prices for the four factors are w1 = $4, w2 = $8, w3 = $5, and w4 = $3. The firm must use at least 20 units of factor 2. The cost of producing 100 units in the cheapest possible way is

• A) $700.
• B) $1,040.
• C) $880.
• D) $1,300.
• E) $300.

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Definitions:

Supply Curves

Graphical representations showing the relationship between the price of a good and the amount of the good that suppliers are willing to sell.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in its price, indicating its sensitivity to price changes.

Specific Excise Tax

A tax levied on a particular good or service, usually based on a fixed amount per unit, such as per liter of alcohol or per pack of cigarettes.

Unitary

A term in economics used to describe a situation where a change in one factor leads to a proportionate change in another factor.