Suppose That Production for Good X Is Characterized by the Following

question 99

Multiple Choice

Suppose that production for good X is characterized by the following production function,Q = K^0.5L^0.5,where K is the fixed input in the short run.If the per-unit rental rate of capital,r,is $86.80 and the per-unit wage,w,is $20,then the average total cost of using 25 units of capital and 49 units of labor is:

• A) $5.
• B) $75.
• C) $90.
• D) There is insufficient information to determine the average total costs.

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Definitions:

Undepreciated Cost

Undepreciated cost refers to the original cost of an asset minus any depreciation that has been claimed to date, reflecting its current book value.

Business Automobile

A vehicle owned and used by a company for business operations or activities.

Market Value

The current price at which an asset or service can be bought or sold, determined by supply and demand dynamics in open markets.

Market Value

The current market valuation at which you can buy or sell a service or asset.