A Competitive Firm Uses Two Variable Factors to Produce Its

A competitive firm uses two variable factors to produce its output, with a production function q = min{x1, x2}.The price of factor 1 is $4 and the price of factor 2 is $1.Due to a lack of warehouse space, the company cannot use more than 15 units of x1.The firm must pay a fixed cost of $90 if it produces any positive amount but doesn't have to pay this cost if it produces no output.What is the smallest integer price that would make a firm willing to produce a positive amount?

A) $15
B) $21
C) $5
D) $24
E) $11

Correct Answer:

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