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.

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Definitions:

Historical Cost

The original monetary value of an asset or investment at the time of its acquisition, not adjusted for inflation or changes in market value.

Consolidated Financial Statements

Financial statements that combine the financial information of a parent company with its subsidiaries, presenting it as if the group is a single entity.

Entity Principle

The Entity Principle is an accounting concept stating that a business must be accounted for separately from its owner or any other business entity.

Revenues Earned

Income that has been generated from business activities and is recognized once the service has been provided or the goods have been delivered.