Suppose That Production for Good X Is Characterized by the Following

question 14

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 $15 and the per-unit wage,w,is $5,then the average fixed cost of using 16 units of capital and 25 units of labor is:

• A) $9.
• B) $12.
• C) $56.
• D) There is insufficient information to determine the average fixed costs.

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Definitions:

Continuation

The act of proceeding or carrying on with an activity or process without interruption.

Gestalt Psychology

A psychological approach that emphasizes the perception of whole objects rather than the individual elements.

Perception

The process by which sensory stimuli are interpreted and organized in the brain to form a coherent picture of the world.

Patterns And Configurations

Patterns and configurations denote the recognisable order in which things are arranged or occur, and the way elements are combined and oriented relative to one another.