Suppose That the Cost Function of the Honey Farm Is

question 21

Multiple Choice

suppose that the cost function of the honey farm is C_H(H, A) = H ²/100 - 3A and the cost function of the apple orchard is C_A(H, A) = A²/100, where H and A are the number of units of honey and apples produced respectively.The price of honey is $7 and the price of apples is $5 per unit.Let A₁ be the output of apples if the firms operate independently, and let A₂ be the output of apples if the firms are operated by a profit-maximizing single owner.

• A)A₁ = 125 and A₂ = 250.
• B)A₁ = A₂ = 250.
• C)A₁ = 200 and A₂ = 250.
• D)A₁ = 250 and A₂ = 400.
• E)A₁ = 350 and A₂ = 250.

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Definitions:

Productive Resources

Inputs used in the production of goods and services, including labor, capital, and natural resources.

Want

An unfulfilled desire or need that individuals or societies aim to satisfy through the acquisition of goods or services.

Marginal Analysis

The comparison of marginal (“extra” or “additional”) benefits and marginal costs, usually for decision making.

Marginal Benefits

The uplift in utility or enjoyment gained through consuming or producing an added unit of a good or service.