Suppose the production function for a competitive firm is y=f(x1,x2)= x1 1/4 x2 1/4 . The cost per unit of the first input is w1 and the cost of the second input is w2.A: What are the returns to scale of this production function?B: Find the cheapest input bundle, x1 and x2, that yields the given output level of y.C: Write down the formula of the firm’s total costs as a function of y.D: Are the average costs increasing, constant or decreasing in y? Are the marginal costs increasing, constant or decreasing in y? X2Suppose the production function for a competitive firm is y=f(x₁,x2)= x₁¹/4x₂¹/4. The cost per unit ofthe first input is w₁ and the cost of the second input is w2.a. What are the returns to scale of this production function?b.Find the cheapest input bundle, x₁ and x₂, that yields the given output level of y.c. Write down the formula of the firm's total costs as a function of y.d. Are the average costs increasing, constant or decreasing in y? Are the marginal costsincreasing, constant or decreasing in y?

Cost minimization problem of producer: For the given output level the firm and per unit cost of…

Answered: Suppose the production function for a…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 21P

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Suppose the production function for a competitive firm is y=f(x1,x2)= x₁ ^1/4 x₂ ^1/4 . The cost per unit of the first input is w1 and the cost of the second input is w2.

A: What are the returns to scale of this production function?

B: Find the cheapest input bundle, x1 and x2, that yields the given output level of y.

C: Write down the formula of the firm’s total costs as a function of y.

D: Are the average costs increasing, constant or decreasing in y? Are the marginal costs increasing, constant or decreasing in y?

X2
Suppose the production function for a competitive firm is y=f(x₁,x2)= x₁¹/4x₂¹/4. The cost per unit of
the first input is w₁ and the cost of the second input is w2.
a. What are the returns to scale of this production function?
b.
Find the cheapest input bundle, x₁ and x₂, that yields the given output level of y.
c. Write down the formula of the firm's total costs as a function of y.
d. Are the average costs increasing, constant or decreasing in y? Are the marginal costs
increasing, constant or decreasing in y?

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Thank you for your answer, could you please answer part D.

D: Are the average costs increasing, constant or decreasing in y? Are the marginal costs increasing, constant or decreasing in y?

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