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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