Assume that a firm has a production function q = xy, where x and y are the input factors. Also, let's assume the wage rate (or price) of x (w1) is greater than the wage rate of y (w2). What would be the form of the cost function given that the firm tries to minimize the costs?
1
C = w1x + w2y
2
C = (w1 + w2) * sqrt(q)
3
C = (w1 - w2) * q
4
C = (w1 + w2) * q