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Questions › DSE › DSE 2011 › Q48
2 marksMicroeconomics › Costs of production › Cost minimisation and long-run input choiceModerateabout 3 min

DSE 2011 Question 48: Costs of production

A firm has an order to supply 20 units of output. It can divide production across two plants, 1 and 2, with cost functions c1(q1)=q12c_{1}(q_{1})=q_{1}^{2}c1​(q1​)=q12​ and c2(q2)=3q22c_{2}(q_{2})=3q_{2}^{2}c2​(q2​)=3q22​, subject to q1+q2=20q_{1}+q_{2}=20q1​+q2​=20. To meet the total production target at minimum cost, the amount of output the firm should produce in its first plant is

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A firm has an order to supply 20 units of output. It can divide production across two plants, 1 and 2, with cost functions c₁(q₁)=q₁² and c₂(q₂)=3q₂², subject to q₁+q₂=20. To meet the total production target at minimum cost, the amount of output the firm should produce in its first plant is (A) 20 units. (B) 15 units. (C) 10 units. (D) 5 units.

Also written as: A firm has an order to supply 20 units of output. It can divide production across two plants, 1 and 2, with cost functions c_1(q_1)=q_1^2 and c_2(q_2)=3q_2^2, subject to q_1+q_2=20. To meet the total production target at minimum cost, the amount of output the firm should produce in its first plant is

Costs of production has come up 83 times in 7 exams since 2006.

What this question tests

This question is on Cost minimisation and long-run input choice, part of Costs of production in Microeconomics.

Choosing inputs to produce a given output at least cost, including across several plants.

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Question from the DSE 2011 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.