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

question 28

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. The firm wants to produce 1,800 units of output in the most efficient way possible. How much does the firm spend?

• A) $2,000
• B) $1,300
• C) $1,200
• D) $1,100

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