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:

Liabilities

Financial obligations or debts owed by a business to creditors, which can be current (due within one year) or long-term.