Question

The prices of inputs (x1,x2) are (4,1). If the production function is given by f(x1,x2) = minx1,x2, what is the cost function?

Answer 1

The cost function for the production function f(x1,x2) = min(x1,x2) with prices of inputs (4,1) is 4x1 + x2.

Step-by-step explanation:

The cost function tells us the cost of producing a given quantity of output based on the prices of the inputs. The cost function for the production function f(x1,x2) = min(x1,x2) with prices of inputs (4,1) is 4x1 + x2.

In this case, the production function is given by f(x1,x2) = min(x1,x2), which means that the firm will produce the minimum of x1 and x2 as output. Since the prices of the inputs are (4,1), we can calculate the cost function as follows:

Cost(x1,x2) = x1*Price(x1) + x2*Price(x2) = x1*4 + x2*1 = 4x1 + x2

So, the cost function is Cost(x1,x2) = 4x1 + x2.