Q1.b (7 points) (b) Now, suppose the price of factor 2 has increased to $40, and the price of factor1 is still $4. To produce y = 1 unit of output with the lowest cost, how much of factor 1 and factor 2 should the firm use? Find the optimal bundle of inputs and calculate the minimal cost. 01.0 (9 points) (c) Suppose the firm utilizes a new technology to produce output. According to the new production function, factors 1 and 2 must be combined in fixed proportions. To produce 2 units of output, the firm needs to combine 3 units of factor1 with % a unit of factor 2. If the price of factor1 is $2 a unit and the price of factor 2 is $4 a unit, draw an isocost representing the lowest cost of producing 2 units of output. Q1.a (9 points) A firm produces its output using the following production function: f(x1,x2) = Vxl1+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 factor1 and factor 2 should the firm use? Find the optimal bundle of inputs and calculate the minimal cost