The production function is given by f(x)= 4x^1/2.If the price of the commodity produced is $60 per unit and the cost of the input is $20 per unit, how much profit will the firm make if it maximizes profits? A)$1,444 B)$705 C)$720 D)$358 E)$363

Question

Quizplus · Accepted Answer

To maximize profit, set marginal revenue equal to marginal cost. The marginal product is the derivative of f(x), which is 2x^(-1/2). Set 60 * 2x^(-1/2) = 20, solve for x to find the optimal input level. Calculate output using f(x), then profit = (price * output) - (cost * input). The profit is $720.

The Production Function Is Given by F(x)= 4x1/2

The Production Function Is Given by F(x)= 4x^1/2