A Firm's Production Function Is F(x1, X2)= (Min{x₁, 5x₂})^1/2

question 1

Multiple Choice

A firm's production function is f(x1, x2) = (min{x₁, 5x₂}) ^1/2.If the price of factor 1 is w1 = $5 per unit and the price of factor 2 is w2 = $25 per unit, then its supply function is given by the equation S(p) =

• A)p/20.
• B)max{w1, 5w2}p.
• C)min{w1, 5w2}p.
• D)10p.
• E)min{5p, 125p}p.

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Definitions:

Federal Tax Revenues

The income received by the federal government from taxes and other sources used to fund public expenditures.

Excise Tax

An excise tax is a specific tax levied on the sale of certain goods and services, such as alcohol, tobacco, and fuel, usually with the aim of discouraging their use or raising government revenue.

Demand Elasticity

A measure of how much the quantity demanded of a good changes in response to a change in the price of that good.

Sales Tax

Sales tax is a government-imposed levy on the sale of goods and services, paid by the purchaser at the time of sale.