A competitive firm uses two variable factors to produce its output, with a production function q = min{x1, x2}.The price of factor 1 is $8 and the price of factor 2 is $5.Due to a lack of warehouse space, the company cannot use more than 10 units of x1.The firm must pay a fixed cost of $80 if it produces any positive amount but doesn't have to pay this cost if it produces no output.What is the smallest integer price that would make a firm willing to produce a positive amount?
A)$44
B)$41
C)$29
D)$13
E)$21

Question

Quizplus · Accepted Answer

Given the constraints and costs, the firm would need to cover its variable costs and fixed costs to be willing to produce a positive amount. The smallest integer price that allows the firm to cover these costs and potentially make a profit would encourage production.

A Competitive Firm Uses Two Variable Factors to Produce Its