Question
The production function is f(x1; x2) = x1^1/2x2^1/2. The price of factor 1 is 16, the price of factor 2 is 32, and the price
The production function is f(x1; x2) = x1^1/2x2^1/2. The price of factor 1 is 16, the price of factor 2 is 32, and the price of output is 64.
(a) Write down the profit function as a function of both the inputs.
(b) Write down the long run profit maximization conditions.
(c) In what proportions should the firm use factors 1 and 2 if it wants to maximizeprofits?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Accounting Making The Connection
Authors: J David Spiceland, Wayne Thomas, Don Herrmann
1st Edition
0077862260, 9780077862268
