Answered: factor 2 is $12, in what proportions…

factor 2 is $12, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits? Question 21 Answer a. x1 = 12x2. b. x

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

The production function is f(x1, x2) = x1/21x1/22.
If the price of factor 1 is $6 and the price of
factor 2 is $12, in what proportions should the
firm use factors 1 and 2 if it wants to maximize
profits? Question 21 Answer a. x1 = 12x2. b. x
1 = x2. c. x1 = 2x2. d. We can't tell without
knowing the price of the output. e. x1 = 0.50x2.

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