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Question
In the short run, x2 is fixed at 1 - the firm cannot increase or decrease its amount of this input, and must pay for this 1 unit of x2 regardless of what production decision it makes.
(a) Suppose that p, the price of the firm’s output, is 1, and the input prices are w1 = 1 and w2 = 10. Calculate the firm’s profit maximising choice of x1 and output.
(b) Calculate the firm’s profit-maximising ...
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02 Sep 2017
Expiry Date: 02 Sep 2017