Suppose a Firm with a Production Function Q = KL

question 149

Multiple Choice

Suppose a firm with a production function Q = KL (where MP_L = K and MP_K = L) is producing 125 units of output by using 5 workers and 25 units of capital. The wage rate (W) per worker is $10 and the rental per unit of capital (R) is $2. If it decreases output to 45 units, long-run average total cost _____ at 125 units of output to _____ at 45 units of output.

• A) rises from $1.80; $2
• B) rises from $0.80; $1.33
• C) falls from $0.80; $0.60
• D) falls from $1.80; $1.15

Prepare a budgeted income statement based on operating budgets.

Understand the role of ending and beginning inventory levels in production and budgeting.

Understand the concept of schemas and how they influence perception and understanding.

Identify and describe the role of priming in cognitive processes.

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