A Firm Has a Production Function of Q = KL

question 54

Multiple Choice

A firm has a production function of Q = KL + L, where MP_L = K + 1 and MP_K = L. The
Wage rate (W) is $100 per worker and the rental (R) is $100 per unit of capital. In the short run, capital (K) is fixed at 4 and the firm produces 100 units of output. The firm's long run total cost of producing 100 units of output is $____.

• A) 3,000
• B) 2,400
• C) 1,900
• D) 1,500

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