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

question 9

Multiple Choice

A firm's production function is given by Q = KL.The marginal products of labor and capital are,respectively,MP_L = K and MP_K = L.The wage rate of labor is w = $10 and the rental rate of capital is r = $20.What is the most efficient combination of labor and capital that also yields a cost of exactly $1000?

• A) (10, 45)
• B) (25, 50)
• C) (50, 25)
• D) (20, 40)

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Definitions:

Cash Customers

Consumers who pay for goods or services with cash at the time of purchase, rather than using credit.

Inventory Turnover

A ratio indicating how many times a company's inventory is sold and replaced over a specific period.

Receivables Period

The amount of time it typically takes for a business to collect payments owed by its customers after selling its goods or services on credit.

Types of Inventory

Refers to the classifications of inventory that businesses maintain, including raw materials, work-in-progress, and finished goods.