A competitive firm has the three-factor production function f (x, y, z) = . The factor prices used to be wx = $1, wy = $2, and wz = $3. Suppose that the price of factor y doubled while the other two prices stayed the same. Then the cost of production
A) increased by more than 10% but less than 50%.
B) increased by 50%.
C) doubled.
D) stayed the same.
E) increased by more than 50% but did not double.

Question

A competitive firm has the three-factor production function f (x, y, z) =  . The factor prices used to be wx = $1, wy = $2, and wz = $3. Suppose that the price of factor y doubled while the other two prices stayed the same. Then the cost of production
A) increased by more than 10% but less than 50%. 
B) increased by 50%. 
C) doubled. 
D) stayed the same. 
E) increased by more than 50% but did not double.

Quizplus · Accepted Answer

The Answer of A competitive firm has the three-factor production function f (x, y, z) =  . The factor prices used to be wx = $1, wy = $2, and wz = $3. Suppose that the price of factor y doubled while the other two prices stayed the same. Then the cost of production
A) increased by more than 10% but less than 50%. 
B) increased by 50%. 
C) doubled. 
D) stayed the same. 
E) increased by more than 50% but did not double.

A Competitive Firm Has the Three-Factor Production Function F (X