A firm with the production function f(x) = x₁x₂ wants to produce 100 units of output. a. How much of each input should the firm use if each unit of input costs $1? b. How much of each input should the firm use if w₁ = $1 and w₂ = $4? C. How much of each input will the firm need if it wants to produce 225 units of output and the price of each input is $1? d. Can you tell what kind of returns to scale this production function has from the input demands for each quantity of output?

A firm with the production function f(x) = x₁x₂ wants to produce 100 units of output. a. How much of each input should the firm use if each unit of input costs $1? b. How much of each input should the firm use if w₁ = $1 and w₂ = $4? C. How much of each input will the firm need if it wants to produce 225 units of output and the price of each input is $1? d. Can you tell what kind of returns to scale this production function has from the input demands for each quantity of output?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2. A firm with the production function f(x) = x₁x₂ wants to produce 100 units of output.
a. How much of each input should the firm use if each unit of input costs $1?
b. How much of each input should the firm use if w₁ = $1 and w₂ = $4?
c. How much of each input will the firm need if it wants to produce 225 units of
output and the price of each input is $1?
d. Can you tell what kind of returns to scale this production function has from the
input demands for each quantity of output?

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