A firm wants to know how to minimize its costs for its new production plant, for any desired level of output Suppose the production is given by y f(x 1 , x 2 ) 2 x 1 1 2 x 2 1 2 , where x 1 and x 2 are inputs, and the input prices are w 1 and w 2 i Sketch the cost minimization problem Label your ax...

i The cost minimization problem can be sketched as follows Cost Minimization Problem On the graph th ...

A firm wants to know how to minimize its costs for its new production plant, for any

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A firm wants to know how to minimize its costs for its new production plant, for any desired level of output. Suppose the production is given by y = f(x₁, x₂) = 2 x₁^1/2 x₂^1/2, where x₁ and x₂ are inputs, and the input prices are w₁ and w₂.

i. Sketch the cost minimization problem. Label your axes and graph appropriately. (1 point)

ii. Find the optimal choices of x₁ and x₂. (2 points)

iii. Find the cost function. (1 point)

iv. Now suppose input prices are given. Let the price of each input be equal to 4. In this case, what would be the firm's equation for marginal cost?

Related Book For answer-question

Intermediate Microeconomics

ISBN: 978-0393123968

9th edition

Authors: Hal R. Varian

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Posted Date: Feb 15, 2024 03:10 AM

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A firm wants to know how to minimize its costs for its new production plant, for any

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Intermediate Microeconomics

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