Question 1.59 uses poor notation; in particular their introduction of f is confusing and deceptive.
Using algebra, and given the information listed before the problem, you could write Cost Per Die in terms if Die Area (a variable the designer can control) and constants (which the designer has no control over). You'll then see that Cost is approximately proportional to (Die Area)x. Your goal is to determine an appropriate value for x.
Don't forget to explain what implications this has for designers.