A Firm's Production Function Is Q = 12x0

question 2

Multiple Choice

A firm's production function is q = 12x0.50y0.50, where x and y are the amounts of factors x and y that the firm uses as inputs.If the firm is minimizing unit costs and if the price of factor x is 5 times the price of factor y,the ratio in which the firm will use factors x and y is closest to

• A)x/y = 0.20.
• B)x/y = 0.40.
• C)x/y = 1.
• D)x/y = 1.67.
• E)x/y = 5.

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Definitions:

Mean-Variance Efficient

A portfolio construction strategy that aims to achieve the highest expected return for a given level of risk by optimizing the mix of investments.

Expected Returns

The anticipated return on an investment, based on historical averages or statistical analyses.

Variances

Statistical measures that represent the dispersion of data points in a data set relative to its mean, indicating how spread out the data is.

Well-Diversified Portfolio

A portfolio that contains a wide variety of investments across different asset classes and sectors to minimize risk.