.A company can sell its only product and in a perfectly competitive market at a price of 15. To produce it, it must purchase two production inputs: labor (x1) and machinery (x2). Initially, the...

Extracted text: .A company can sell its only product and in a perfectly competitive market at a price of 15. To produce it, it must purchase two production inputs: labor (x1) and machinery (x2). Initially, the company only has 1 machine and it is not possible to change this in the short term. Inputs are purchased in competitive markets with respective prices (w1, w2) = (5,10). The production function is as follows: 3 2/3 1/3 f(x,x2) a) Present the problem of maximization of the company. b) Find the first order condition that must be solved to find the optimal level of supplies. c) Find the optimal input level x1 that the company must contract in the above problem to maximize your profits.


Extracted text: d) Without redoing your calculations, argue whether the optimal level of x1 in the short term would have been higher or lower if the company had had 2 machines instead of 1.