Answer to Question #268697 in Microeconomics for bbb

Question

If the production function is given by f(x1, x2) = min{x1, x2} +

min{x3, x4}, what is the minimum cost of producing one unit of output?

Answer 1

What is the least cost of creating one output unit if the production function is f(x1, x2) = minx1, x2 + minx3, x4?

We have the following options for producing one unit of output:

Option 1

x1=0, x2=0, x3=0, x4=0, x5 x3, x4=1 and minx3, x4=1

It indicates that x1=x2=0. And either x3 or x4 can be 1; we choose the input with the lowest price, i.e., x4=1.

As a result, the lowest cost is the price multiplied by four or two.