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A competitive firm’s production function is f(x1,x2)= 24x1^1/2x2^1/2. The price of factor 1 is 1, the...

A competitive firm’s production function is f(x1,x2)= 24x1^1/2x2^1/2. The price of factor 1 is 1, the price of factor 2 is 2 and the price of output is 4. (a) Write down the cost function in terms of both the inputs. (b) What is the long-run cost minimization condition for this firm? (c) In what proportions should x1 and x2 be used if the firm wants to minimize its costs?

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Answer #2

Part a)

Part b)

long run cost minimization condition

Part c)

In order to minimize cost , amount of input 1 used should be twice the amount of input 2 used

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