Suppose a Firm with a Production Function Given by Q

question 32

Multiple Choice

Suppose a firm with a production function given by Q = 30K^0.5L^0.5 produces 1,500 units of output. The firm pays a wage of $40 per unit and pays a rental rate of capital of $640 per unit. How many units of labor and capital should the firm employ to minimize the cost of producing 1,500 units of output? (Note: )

• A) L = 200; K = 12.5
• B) L = 625; K = 4.
• C) L = 275; K = 8.75
• D) L = 150; K = 10

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Definitions:

Non-operating Section

A section of the income statement that reports revenue and expense resulting from secondary, non-core business activities.

Statement Of Income

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