An orange grower has discovered a process for producing oranges that requires two inputs. the production function is q = min{2x1, x2}, where x1 and x2 are the amounts of inputs 1 and 2 that he uses. the prices of these two inputs are w1 = $5 and w2 = $2, respectively. the minimum cost of producing 140 units is therefore

a. $980.
b. $630.
c. $1,400.
d. $280.
e. $700.

Option (B) is correct.

Explanation:

The prices of two inputs 1 and 2 are as follows:

w1 = $5

w2 = $2

Q = min{2x1, x2}

Cost is minimized when 2x1 = x2

140 = min{2x1, x2}

2x1 = 140

x1 = 70

x2 = 2x1 = 140

Total cost, C = w1.x1 + w2.x2

                     = 5x1 + 2x2

C($)  = (5 × 70) + (2 × 140)

        = 350 + 280

        = $630

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know