A competitive firm uses two inputs and has a production function f(x1, x2)  39x.25 1x.25 2.The firm can buy as much of either factor as it likes at factor prices w1  w2  $1.The cost of producing y units of output for this firm is

A) 2(y/39) 2.
B) 39(x₁  x₂) y.
C) (x₁  x₂) /39.
D) y/78.
E) y₂/78.

The cost of producing y units of output is derived from the production function and the factor prices. Given the production function $f(x_1,x_2)=39x_1^{0.25}{x}_2^{0.25}$ and factor prices w_1 = w_2 = $1 , the cost function can be found by solving for $x_1$ and $x_2$ that minimize the total cost subject to producing $y$ units of output. The cost of producing $y$ units, given the symmetry and the power of 0.25 in both $x_1$ and $x_2$ , leads to equal spending on both inputs. The correct cost function, considering the production function and equal factor prices, is $2(y/39{)}^2$ , which reflects the costs associated with producing $y$ units of output efficiently given the production technology and input prices.