A competitive firm with output has a production function f(x₁,x₂)= (4x₁ + x₂) ^1/2, where x₁ and x₂ are inputs used in production. The firm produces the output by minimizing cost. With input prices p₁ and p₂, which of the following is true

• A. The production technology has constant returns to scale.
• B. The firm must use only input x₁ if p₁ < 1.5p₂
• C. The firm must use only input x₁ if p₁ < 3p₂
• D. The firm must use only input x₁ if p₁ < 4 p₂

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A competitive firm with output has aproduction function fx1x2 4x1x2 x1 and x2 are in... View the full answer