A Competitive Firm Uses Two Inputs and Has a Production

question 36

Multiple Choice

A competitive firm uses two inputs and has a production function f(x1, x2) = 39x.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)2(y/39)2.
• B)39(x₁ + x₂)y.
• C)(x₁ +x₂)/39.
• D)y/78.
• E)y₂/78.

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Definitions:

Net Operating Income

Net Operating Income (NOI) is a measure of a company's profitability from its core business operations, excluding expenses and revenues from financing and investing activities.

Absorption Costing

Absorption costing is an accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.

Net Operating Income

A measure of a company's profitability from its core business operations, excluding deductions of interest and taxes.

Absorption Costing

A costing method that includes all manufacturing costs - both fixed and variable - in the cost of a product.