Output for a Simple Production Process Is Given by Q

question 48

Multiple Choice

Output for a simple production process is given by Q = KL, where K denotes capital and L denotes labor. The price of labor is $10 per unit and the price of capital is $2 per unit. Suppose at the current level of production the firm is minimizing costs and the marginal product of labor is 10. Given this you know that the marginal product of capital must be

• A)5.
• B)2.
• C)10.
• D)It is impossible to say with the information given

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Definitions:

Critical Thinking

The objective analysis and evaluation of an issue to form a judgment.

Analytical

Relating to or using analysis or logical reasoning to address a problem or dissect a concept.

Evaluative

Concerned with assessing or judging the value, significance, or condition of something.

Positive Critical Thinking

The practice of engaging in reflective and independent thinking in a constructive or optimistic manner.