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:

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to update the accounts for accruals and deferrals.

Year-End Adjustment

Year-end adjustment consists of accounting entries made at the end of an accounting period to update balances of accounts so that financial statements can be accurately produced.

Insurance Policy

A contract between the insurer and the insured, which outlines the claims which the insurer is legally required to pay in exchange for the premium.

Net Income

The profit a company generates after deducting all costs, expenses, and taxes from its total revenue.