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In Problem 11, the Production Function Is F(x1, X2)

Question 20

Multiple Choice

In Problem 11, the production function is f(x1, x2) In Problem 11, the production function is f(x<sub>1</sub>, x<sub>2</sub>) . If the price of factor 1 is $8 and the price of factor 2 is $16, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits? A) x<sub>1</sub> = x<sub>2</sub>. B) x<sub>1</sub> = 0.50x<sub>2</sub>. C) x<sub>1</sub> = 2x<sub>2</sub>. D) We can't tell without knowing the price of output. E) x<sub>1</sub> = 16x<sub>2</sub>. . If the price of factor 1 is $8 and the price of factor 2 is $16, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?


A) x1 = x2.
B) x1 = 0.50x2.
C) x1 = 2x2.
D) We can't tell without knowing the price of output.
E) x1 = 16x2.

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