A Competitive Firm Uses Two Variable Factors to Produce Its

question 30

Multiple Choice

A competitive firm uses two variable factors to produce its output, with a production function q = min{x1, x2}.The price of factor 1 is $8 and the price of factor 2 is $5. Due to a lack of warehouse space, the company cannot use more than 10 units of x1. The firm must pay a fixed cost of $80 if it produces any positive amount but doesn't have to pay this cost if it produces no output. What is the smallest integer price that would make a firm willing to produce a positive amount?

• A) $44
• B) $41
• C) $29
• D) $13
• E) $21

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Definitions:

Range Threshold

The minimum and maximum values within which a particular sensory stimulus, action, or phenomenon is perceptible or has an effect.

Receptors

Protein molecules on the surfaces of dendrites and cell bodies that have distinctive shapes and will interact only with specific neurotransmitters.

Activation

in psychology, refers to the arousal level of the central nervous system, influencing alertness and responsiveness to stimuli.

Absolute Thresholds

The smallest intensity of a stimulus that must be present for it to be detected at least half the time by a subject.