Suppose That Production for Good X Is Characterized by the Following

question 97

Multiple Choice

Suppose that production for good X is characterized by the following production function, Q = K^0.5L^0.5, where K is the fixed input in the short run.If the per-unit rental rate of capital, r, is $25 and the per-unit wage, w, is $15, then the fixed cost of using 81 units of capital and 9 units of labor is

• A)$2,160.
• B)$2,025.
• C)$135.
• D)there is insufficient information to determine the fixed costs.

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Definitions:

Gross Requirements

The total demand for a component or raw material before considering inventory on hand or scheduled receipts.

Product A

A placeholder name for a specific item or good produced by a company.

Lot-Sizing Algorithms

Mathematical formulas designed to determine the optimal order quantity that minimizes the total costs, including ordering and holding costs.

MRP

A system known as Material Requirements Planning calculates the necessary components and materials for manufacturing a product.