A Competitive Firm Uses Two Variable Factors to Produce Its

question 30

Multiple Choice

A competitive firm uses two variable factors to produce its output, with a production function q = min{x1, x2}.The price of factor 1 is $4 and the price of factor 2 is $1.Due to a lack of warehouse space, the company cannot use more than 15 units of x1.The firm must pay a fixed cost of $90 if it produces any positive amount but doesn't have to pay this cost if it produces no output.What is the smallest integer price that would make a firm willing to produce a positive amount?

• A)$15
• B)$21
• C)$5
• D)$24
• E)$11

---

Definitions:

Labor Force

The total number of people, both employed and unemployed, actively seeking work in a specified economic area.

Agriculture

The science, art, and business of cultivating soil, producing crops, and raising livestock; it is a fundamental component of the economy and food supply.

Legal System

A comprehensive system for interpreting and enforcing laws within a given jurisdiction.

Sexual Harassment

Undesired sexual propositions, soliciting sex, and any verbal or physical conduct of a sexual nature that constitutes harassment.