Question

Let the firm's production function be given by y = x1 * x2. Suppose w1 = 2 and w2 = 1. What is the production function?

1) y = x1 + x2
2) y = x1 - x2
3) y = x1 / x2
4) y = x1 * x2

Answer 1

The production function is y = x1 * x2. The correct answer is option 4.

Step-by-step explanation:

The production function is given by the equation y = x1 * x2. This means that the firm's output (y) is equal to the product of the two input factors x1 and x2. The values of x1 and x2 represent the amounts of two different inputs used in the production process.

In this case, w1 = 2 and w2 = 1, which means that x1 has a cost of 2 and x2 has a cost of 1. Therefore, the correct production function is y = x1 * x2 (option 4).