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

question 5

Multiple Choice

the production function is f(x₁, x₂) = x^1/2₁x^1/2₂.If the price of factor 1 is $10 and the price of factor 2 is $20, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

• A)We can't tell without knowing the price of output.
• B)x₁ =2x₂.
• C)x₁ = 0.50x₂.
• D)x₁ = x₂.
• E)x₁ = 20x₂.

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Definitions:

Direct Materials Cost

The expenditure on raw materials that can be directly attributed to the production of a specific product.

Direct Labour-Hours

The hours worked directly on the production of goods or services by employees.

Job-Order Costing System

A job-order costing system is an accounting method that assigns manufacturing costs to individual products or job orders based on the specific resources each job consumes.

Process Costing

An accounting methodology used in industries where production is continuous, assigning costs to units of product based on the process they have undergone.