Suppose That Production for Good X Is Characterized by the Following

question 176

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 average fixed cost of using 81 units of capital and 9 units of labor is

• A)$5.
• B)$75.
• C)$80.
• D)there is insufficient information to determine the average fixed costs.

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Definitions:

Competitive Market Process

The dynamic system in which businesses compete to offer goods and services to consumers, driven by the forces of supply and demand, leading to innovations and efficiencies.

Economic Prosperity

A state of economic health and growth, typically characterized by high income levels and low unemployment.

Prices

Monetary value assigned to goods, services, or resources in the market, influenced by supply and demand dynamics.

Production Costs

The total expense incurred in the manufacture of a product, including materials, labor, and overhead.