A competitive firm's production function is f(x_1,x_2) = 8x_1^(1/2) + 8x_2^(1/2) . The price of...
Question:
A competitive firm's production function is {eq}f(x_1,x_2) = 8x_1^{1/2} + 8x_2^{1/2} {/eq}. The price of factor 1 is $1 and the price of factor 2 is $3. The price of output is $6. What is the profit-maximizing quantity of output?
Production Function:
The mathematical function which states the relationship between the factors of production and the product is known as production function. These are different for different time periods like the short run production function and long run production function.
Answer and Explanation: 1
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View this answerThe total revenue function is:
{eq}\begin{align*} TR &= Pf\left( {{x_1},{x_2}} \right)\\ &= 6\left( {8x_1^{0.5} + 8x_2^{0.5}} \right)\\ &=...
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Production Function in Economics: Definition, Formula & Example
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