Suppose a Firm's Short-Run Production Function Is Given by Q

question 70

Multiple Choice

Suppose a firm's short-run production function is given by Q = F(L) = 4L.If the wage rate is $12 and the firm has sunk costs of $300,then the firm's cost function is:

• A) C(Q) = $12L.
• B) C(L) = $300 + $3L.
• C) C(Q) = $300 + $3Q.
• D) C(Q) = $300 + $12Q.

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Definitions:

Factory Overhead

All indirect costs related to the manufacturing process, including maintenance, utilities, and salary of supervisory staff.

Standard

Accepted criteria or expected specifications established as a model for measuring quality, performance, or compliance.

Budgeted

The process of creating a plan for a company's spendings and incomes over a specific period, typically including projected revenues, expenses, and net income.

Direct Labor Time Variance

The difference between the actual hours worked and the standard hours allowed for the work done, multiplied by the standard labor rate.