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

question 20

Multiple Choice

In Problem 11, the production function is f(x₁, x₂) . If the price of factor 1 is $8 and the price of factor 2 is $16, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

• A) x₁ = x₂.
• B) x₁ = 0.50x₂.
• C) x₁ = 2x₂.
• D) We can't tell without knowing the price of output.
• E) x₁ = 16x₂.

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Definitions:

Prn

An abbreviation for "pro re nata," a Latin phrase meaning “as the situation demands” used in healthcare to instruct that medication should be taken as needed.

Sig

A term used in prescriptions, derived from "Signa," indicating the dose, frequency, and manner of taking a medication.

Against

In opposition to or in competition with; denotes a contrasting or conflicting situation.

Milliliter

A unit of volume in the metric system, equivalent to one-thousandth of a liter, commonly used to measure liquids.