The firm must pay a fixed cost of 80 if it produces any, Ask an Expert

Economics

A competitive firm uses two variable factors to produce its output, with a production function y = 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 does not have to pay this cost if it produces no output. Illustrate what is the smallest integer price that would make a firm willing to produce a positive amount?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9224410

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