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

question 19

Multiple Choice

In Problem 11, the production function is f(x₁, x₂) . If the price of factor 1 is $10 and the price of factor 2 is $20, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

• A) We can't tell without knowing the price of output.
• B) x₁ = 2x₂.
• C) x₁ = 0.50x₂.
• D) x₁ = x₂.
• E) x₁ = 20x₂.

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Definitions:

Expansion

The process of a business enlarging its operations, typically through increased production capabilities, market reach, or product lines.

New Market

An emerging sector or industry where a company can expand its operations or products to generate growth.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.

Cash Flow Estimates

Projections of the amount of money expected to flow in and out of a business over a specified period, important for budgeting and financial planning.