The Production Function Is F(x₁, X₂)= X^1/2₁x^1/2₂

question 15

Multiple Choice

the production function is f(x₁, x₂) = x^1/2₁x^1/2₂.If the price of factor 1 is $8 and the price of factor 2 is $16, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

• A)x₁ = x₂.
• B)x₁ = 0.50x₂.
• C)x₁ = 2x₂.
• D)We can't tell without knowing the price of output.
• E)x₁ = 16x₂.

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Definitions:

Status Quo Bias

A preference for the current state of affairs, with changes perceived as a loss.

Omission Bias

A cognitive bias that involves the tendency to judge harmful actions as worse, or less moral, than equally harmful omissions (inactions).

Decisions

The method of selecting options through recognizing a decision, collecting information, and evaluating different solutions.

Effort

The amount of physical or mental energy expended to achieve a goal.