If a Competitive Firm Uses Two Inputs and Has the Production

question 6

True/False

If a competitive firm uses two inputs and has the production function F(x1, x2) = 1 + 2, then its marginal cost curve is horizontal.

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Definitions:

Indifference Curve

A graph showing different combinations of two goods that provide equal satisfaction and utility to a consumer.

Marginal Rates of Substitution

The speed at which a buyer is prepared to sacrifice one item for another while keeping their satisfaction constant.

Bads

Are items that people do not desire to have, opposite to goods, which have a negative impact on utility when consumed.

Indifference Curves

Graphical representations in microeconomics showing different bundles of goods between which a consumer is indifferent.