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A1. (3 marks) Consider a firm producing two goods by using a given amount of inputs. The set of all possible production possibilities are Y
A1. (3 marks) Consider a firm producing two goods by using a given amount of inputs. The set of all possible production possibilities are Y = {y E Ri|y2 = 45 0.5y1 for 192 > 311 and y2 = 90 2y1 for yg g yl}. Draw the production possibilities set of the firm in a welllabeled diagram. Let p1 and p2 denote the prices of outputs 1 and 2, respectively. Solve the revenue maximising levels of outputs for the firm for p1 = 2,102 = 3. What are the level of outputs for 131 = 3,132 = 2? Show your workings. Wou can use graphical tools in your answer if you find them useful]
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