Question: A firm has two variable factors and a production function f(x1; x2) = x1^1/2x2^1/2. The price of its output is 4, the price of factor

A firm has two variable factors and a production function f(x1; x2) = x1^1/2x2^1/2. The price of its output is 4, the price of factor 1 is

w1, and the price of factor 2 is w2.

(a) Write down the profit function in terms of both the inputs

(b) What are the long run profit maximization conditions.

(c) If w1 = 2w2, these two equations imply that x1/x2=----------------?

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