Multiple Choice
the production function is f(x1, x2) =x1/21x1/22.If the price of factor 1 is $14 and the price of factor 2 is $7, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?
A) x1 = 0.50x2.
B) x1 =x2.
C) We can't tell without knowing the price of output.
D) x1 = 2x2.
E) x1 =7x2.
Correct Answer:
Verified
Correct Answer:
Verified
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