Answer to Question #285480 in Microeconomics for kanchan

Question

A competitive firm has a three factor production function f (x, y, z) = (x + y )^1/2 Z^1/3. the factor prices used to be w_x= 4, w_y = 2, and w_z = 1.suppose that that price of factor y doubled while the other two remain same. then the minimum cost of production will be :

A) doubled

B) increase by more than 50 % but less than 100 %

C) increase by less than 50 %

D) stayed the same

Answer 1

If price of factor y doubled while the other two remain same, then the minimum cost of production will increase by less than 50 %.

So, the correct answer is C).