A Competitive Firm Uses Two Inputs and Has a Production

question 14

Multiple Choice

A competitive firm uses two inputs and has a production function f(x1, x2) =23x.25 1x.25 2.The firm can buy as much of either factor as it likes at factor prices w1 = w2 = $1.The cost of producing y units of output for this firm is

• A)23(x1 + x2)y.
• B)y/46.
• C)(x1 + x2)/23.
• D)2(y/23)2.
• E)y₂/46.

Analyze the causes and effects of federal budget deficits and the national debt.

Explain the paradox of thrift and its economic implications.

Understand the process and requirements for passing fiscal policy measures.

Evaluate policies to address inflationary and deflationary gaps and their impact on full employment GDP.

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