A Firm with a Production Function Q = KL (Where

question 110

Multiple Choice

A firm with a production function Q = KL (where K is units of capital and L is units of labor) has an expansion path that is given by K = 2L. The wage rate (W) is $20 and the rental on capital is $10. Assuming that the firm is using the optimal mix of inputs for any given output level, the average total cost when producing 8 units of output is $____.

• A) 10
• B) 20
• C) 80
• D) 40

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