Question: A competitive firm's production function is given by: f(x1, x2) = x1 x2 (a) Does the firm's technology exhibit increasing, constant or decreasing returns to

A competitive firm's production function is given

by: f(x1, x2) = x1 x2

(a) Does the firm's technology exhibit increasing, constant or decreasing returns to scale? Explain (1)

(b) Find the firm's profit function. What level of output should the firm produce to maximize

profits? Explain (2)

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