In Problem 2, Suppose That the Cost Function of the Honey

question 22

Multiple Choice

In Problem 2, suppose that the cost function of the honey farm is C_H(H, A) = - 1A and the cost function of the apple orchard is C_A(H, A) = , where H and A are the number of units of honey and apples produced respectively. The price of honey is $8 and the price of apples is $6 per unit. Let A₁ be the output of apples if the firms operate independently, and let A₂ be the output of apples if the firms are operated by a profit-maximizing single owner.

• A) A₁ = 175 and A₂ = 300.
• B) A₁ = 150 and A₂ = 300.
• C) A₁ = 300 and A₂ = 350.
• D) A₁ = A₂ = 300.
• E) A₁ = 400 and A₂ = 300.

---

Definitions:

Labor Productivity

A measure of economic performance that calculates the output per unit of labor input, such as output per hour worked.

Human Capital

The collective skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.

Agricultural Sector

The segment of an economy devoted to the production, processing, and distribution of food, fibers, and other plant and animal products.

Developing Countries

Nations with a lower living standard, undeveloped industrial base, and lower Human Development Index (HDI) relative to other countries.