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A competitive firm produces a single output using several inputs. The price of output rises by $4 per unit. The price of one of the
A competitive firm produces a single output using several inputs. The price of output rises by $4 per unit. The price of one of the inputs increases by $4 and the quantity of this input that the firm uses increases by 16 units. The prices of all other inputs stay unchanged. Given the firm always chooses technologically feasible profit maximizing production plans, we can infer that
a. the output of the good must have increased by at least 16 units.
b. the input of at least one of the other factors must have increased by at least 16 units
c. the inputs of the other factors must have stayed constant.
d. the output of the good must have increased by at least 8 units
e. the input of at least one of the other factors must have decreased by at least 16 units.
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