In Problem 11, the Production Function Is F(x₁, X₂)

question 18

Multiple Choice

In Problem 11, the production function is f(x₁, x₂) . If the price of factor 1 is $14 and the price of factor 2 is $7, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

• A) x₁ = 0.50x₂.
• B) x₁ = x₂.
• C) We can't tell without knowing the price of output.
• D) x₁ = 2x₂.
• E) x₁ = 7x₂.

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