An Ontario company has 2 inputs (X1 and X2) for the production of a given output whose

Fantastic news! We've Found the answer you've been seeking!

Question:

An Ontario company has 2 inputs (X1 and X2) for the production of a given output whose production function is
f X1, X2 ()=X1^(1/2) X2^(1/4) .
Input 1 (X1) costs an equal salary W1
Input 2(X2) costs an equal wage W2
The price of its output is equal to $4

1) Calculate the Total Revenue (TR) of this company?
2) Calculate the total cost (TC) of this company?
3) Give the equation that the value of the marginal product of input 1 is equal to the wage of input 1?
4) Give the equation that the value of the marginal product of input 2 is equal to the wage of input 2?
5) Solve the two equations with two unknowns X1 and X2 to obtain the quantities of input 1 and input 2 which maximize the profit of this firm based on W1 and W2?
6) How much X1 and X2 do we get?
7) What is the quantity of input 1 demanded by the firm if the salary of input 1 is worth $2, and if the salary of input 2 is worth $1
8) What will be the quantity of input 2 taking into account question 7; how much output will it produce? and what will be his profit?