Scenario 7.3: Use the Production Function: Q = 4L^1/2K^1/2

question 133

Multiple Choice

Scenario 7.3:
Use the production function: Q = 4L^1/2K^1/2.
-Refer to Scenario 7.3. Suppose that the price of labor is $5 and the price of capital is $20. Your firm desires to produce 200 units of output. How much labor will be hired to minimize the costs of producing 200 units of output?

• A) 25
• B) 50
• C) 100
• D) 200
• E) none of the above

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Definitions:

Monopolistic Competitor

Refers to a market structure where many companies sell products that are similar but not identical, allowing them some power to set prices.

Profit

Profit is the financial gain realized when the amount earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Product Promotion

Various marketing strategies and tactics used to increase awareness, interest, and sales of a product.

Monopolistically Competitive Industry

A commercial setup in which various enterprises market goods that are comparable, though not identical, granting them a measure of control within the marketplace.