The Production Function Is Q = K

question 118

Multiple Choice

The production function is Q = K^.4 L^.6.The marginal rate of technical substitution is:

• A) 3/2 K^-1 L.
• B) K^-1 L^-1.
• C) 3/2 K L^-1.
• D) K^.6 L^-.4.

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Definitions:

Activity Cost Pool

A grouping of individual costs based on the activities that drive those costs, used in activity-based costing.

Direct Labor Rate

The cost per hour for labor directly involved in manufacturing a product or providing a service.

Direct Materials Cost

The cost of raw materials that are directly used in the manufacture of a product and are easily traceable to it.

Total Overhead Applied

The total amount of manufacturing overhead costs allocated to individual jobs or products based on a predetermined overhead rate.