The Production Function Is F(x₁, X₂)= X^1/2₁x^1/2₂

question 13

Multiple Choice

the production function is f(x₁, x₂) = x^1/2₁x^1/2₂.If the price of factor 1 is $8 and the price of factor 2 is $4, 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 = x₂.
• C)x₁ = 0.50x₂.
• D)x₁ =2x₂.
• E)x₁ = 4x₂.

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Definitions:

GAAP

Generally Accepted Accounting Principles, which are a collection of commonly-followed accounting rules and standards for financial reporting.

Research and Development

The investigative activities a business conducts to improve existing products and procedures or to lead to the development of new products and procedures.

Write-down

An accounting procedure reducing the book value of an asset when its market value drops below the recorded cost, resulting in a non-cash expense.

Impaired Asset

An asset that has a market value less than its carrying value on the balance sheet, indicating that it may not generate future benefits worth its listed value.