A Competitive Firm Produces Its Output According to the Production

question 27

Multiple Choice

A competitive firm produces its output according to the production function y = min{ , 10}. Let w be the price of the factor x, and let the price of output be $1.The demand for factor x, when the factor price is w, is

• A) x = min{, 10}
• B) x = max{, 100}.
• C) x = min{w², 100}.
• D) x = 10 +.
• E) None of the above.

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Definitions:

Common Stock

Equity ownership in a corporation, with voting rights and potential for dividends, representing a claim on part of the company’s earnings and assets.

Conversion Ratio

The specified number of shares that can be exchanged for one unit of the convertible security.

Exercising Option

The act of implementing the right to buy or sell an underlying asset at a predetermined price before the option expires.

Option Contract

A financial derivative contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price within a specified time frame.