the production function is f(x₁, x₂) = x^1/2₁x^1/2₂. If the price of factor 1 is $10 and the price of factor 2 is $20, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

Question 3 options:

	We can’t tell without knowing the price of output.
	x1 = 2x2.
	x1 = 0.50x2.
	x1 = x2.
	x1 = 20x2.

Question 4 (1 point)

A firm has the production function f(X, Y) = X ^1/2Y ^1/2, where X is the amount of factor x used and Y is the amount of factor y used. On a diagram we put X on the horizontal axis and Y on the vertical axis. We draw some isoquants. Now we draw a straight line on the graph and we notice that wherever this line meets an isoquant, the isoquant has a slope of 23. The straight line we drew

Question 4 options:

	is vertical.
	is horizontal.
	is a ray through the origin with slope 3.
	is a ray through the origin with slope 4.
	has a negative slope.

Answer rating: 100% (QA)

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