A firm produces its output using the following production function: f(x₁, x₂) = √√√x₁ - 1 + 4x2 where x₁ denotes the amount of factor 1 and x2 denotes the amount of factor 2. The market price of factor 1 is $4, and the market price of factor 2 is $10. (a) To produce y = 8 units of output with the lowest cost, how much factor 1 and factor 2 should the firm use? Find the optimal bundle of inputs and calculate the minimal cost.

A firm produces its output using the following production function: f(x₁, x₂) = √√√x₁ - 1 + 4x2 where x₁ denotes the amount of factor 1 and x2 denotes the amount of factor 2. The market price of factor 1 is $4, and the market price of factor 2 is $10. (a) To produce y = 8 units of output with the lowest cost, how much factor 1 and factor 2 should the firm use? Find the optimal bundle of inputs and calculate the minimal cost.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter22: Supply: The Costs Of Doing Business

Section: Chapter Questions

Problem 11E

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