A Firm's Production Function Is Given by Q = KL

question 23

Multiple Choice

A firm's production function is given by Q = KL, where MP_L = K and MP_K = L. The wage rate (W) = $50, and the rental per unit of capital (R) is $12.50. In the short run, capital (K) is fixed at 10 units. The short-run average total cost of producing 100 units of output is _____, and the long-run average total cost of producing 100 units of output is _____.

• A) $14.75; $8.80
• B) $6.25; $5
• C) $6.25; $4.20
• D) $14.75; $9

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Definitions:

Prototype

An early sample, model, or release of a product built to test a concept or process, serving as a thing to be replicated or learned from.