There are 100 identical demanders of product y, and the demand function for each individual is y = 10 - p. The production function for any firm is y = min(z₁,z₂). If the industry were to produce 700 units of y, then aggregate requirements would be: A)z₁= 350 and z₂= 350. B)z₁= 500 and z₂= 500. C)z₁= 700 and z₂= 0 if w₁

Question

There are 100 identical demanders of product y, and the demand function for each individual is y = 10 - p. The production function for any firm is y = min(z₁,z₂). If the industry were to produce 700 units of y, then aggregate requirements would be: A)z₁= 350 and z₂= 350. B)z₁= 500 and z₂= 500. C)z₁= 700 and z₂= 0 if w₁< w₂. D)z₁= 700 and z₂= 700.

Quizplus · Accepted Answer

The production function y = min(z1, z2) implies that both inputs z1 and z2 are required in equal amounts to produce y. To produce 700 units of y, both z1 and z2 must be 700.

There Are 100 Identical Demanders of Product Y, and the Demand