A Firm's Production Function Is Given by

question 55

Multiple Choice

A firm's production function is given by .The marginal products of labor and capital are,respectively, and .Further,the wage rate is and the rental rate of capital is .Suppose the firm wants to produce 27,000 units of output.What is the most efficient combination of labor and capital ?

• A) (20, 20)
• B) (30, 30)
• C) (30, 90)
• D) (90, 30)

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Definitions:

Accrual Basis

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

Accounting Records

The documentation of all the financial transactions and positions of a business, kept for the purpose of financial reporting and auditing.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid out.

Incurred Expenses

Costs that have been recognized or consumed in the operations of a business, regardless of the payment status.