A Competitive Firm Uses Two Inputs and Has a Production

question 26

Multiple Choice

A competitive firm uses two inputs and has a production function f(x1, x2) =8x.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)8(x1 + x2)y.
• B)2(y/8)2.
• C)(x1 + x2)/8.
• D)y/16.
• E)y₂/16.

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