A Firm Has Production Function F (X1, X2, X3, X4)=

question 52

Multiple Choice

A firm has production function f (x1, x2, x3, x4) = min{x1, x2} + min{x3, x4}.This firm faces competitive factor markets where the prices for the four factors are w1 = $7, w2 = $8, w3 = $6, and w4 = $5.The firm must use at least 20 units of factor 2.The cost of producing 100 units in the cheapest possible way is

• A)$1,400.
• B)$1,200.
• C)$1,340.
• D)$1,180.
• E)$500.

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Definitions:

Cannibalization

A reduction in sales volume or market share of a company’s existing product due to the introduction of a new product made by the same company.

Product-line Extensions

The introduction of new products to an existing product line, usually related to the current products but targeted to meet different customer needs or preferences.

Sales of Existing

Transactions involving goods or assets that are not new but have been previously owned or used.

Product Line

A group of related products marketed by the same firm.