Suppose That the Production Function Is F (X1, X2)= (Min{x1

question 23

Multiple Choice

Suppose that the production function is f (x1, x2) = (min{x1, 2x2}) .5.

• A)There are constant returns to scale.
• B)The cost function is a min function.
• C)If the price of x₁ is more than twice the price of x₂, only x₂ is used in production.
• D)A cost-minimizing firm producing 5 units of output will use 25 units of x₁ and some x₂.
• E)The cost function is a linear function of output.

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Definitions:

Current Assets

Assets on a balance sheet that are expected to be converted into cash, sold, or consumed within a year.

Current Liabilities

Financial obligations a company must pay within a year, such as loans, accounts payable, and other debts.

Working Capital Ratio

A financial metric that measures a company's efficiency and its short-term financial health by comparing current assets to current liabilities.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.