A Firm Has the Production Function F(X, Y)= X^3/4 Y^1/4

question 21

Multiple Choice

A firm has the production function f(X, Y) = X^3/4 Y^1/4, where X is the amount of factor x used and Y is the amount of factor y used.On a diagram we put X on the horizontal axis and Y on the vertical axis.We draw some isoquants.Now we draw a straight line on the graph and we notice that wherever this line meets an isoquant, the isoquant has a slope of -9.The straight line we drew

• A)is horizontal.
• B)is a ray through the origin with slope 3.
• C)is vertical.
• D)is a ray through the origin with slope 4.
• E)has a negative slope.

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Definitions:

Price and Demand

Describes the relationship between the price of a good or service and the willingness of people to either buy or sell it at that price.

Assumption

A belief or statement taken for granted without proof, often serving as a basis for further reasoning or arguments.

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold, including expenses like rent, wages, and insurance fees.

Competitive Parity

A marketing strategy where a company allocates its budget to match its competitors' spending to avoid being outspent in key areas.