Suppose a Firm with a Production Function Given by Q

question 98

Multiple Choice

Suppose a firm with a production function given by Q = K^0.25L^0.75 produces 1,500 units of output. The firm pays a wage of $50 per unit and pays a rental rate of capital of $50 per unit. (Note: ) .
To minimize the cost of producing 1,500 units of output, the firm should use:

• A) 3 times as many units of labor as units of capital.
• B) equal amounts of labor and capital.
• C) 1.25 times as many units of capital as units of labor.
• D) 16 units of capital and 6,814 units of labor.

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