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

question 36

Multiple Choice

The production function is f(x₁, x₂) = x^1/2₁x^1/2₂.If the price of factor 1 is $12 and the price of factor 2 is $24, 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)x₁ =24x₂.
• E)We can't tell without knowing the price of the output.

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