A firm has the production function y = f(x1, x2) = A x1

x2 , where A = 9,= 0.3, and = 0.5. The price of factor 1 is w1= 5 and the price of factor 2 is w2= 13. Suppose both factors are variable. Find the cheapest way to produce 815units of output.

i) To produce y = 815, how much of factor 1 will be used?

x1*=

ii) To produce y = 815, how much of factor 2will be used?

x2*=

iii) When producing y = 815, what are the firm's minimum cost?

C=

iv) Now suppose the firm produces y = 1,630 units of output. What are the firm's minimum cost?

Cnew=