A Firm's Production Function Is Given By $Q = K ^ { 2 } L$

question 42

Multiple Choice

A firm's production function is given by $Q = K ^ { 2 } L$ . The marginal products of labor and capital are, respectively, $M P _ { L } = K ^ { 2 }$ and $M P _ { X } = 2 K L$ . Further, the wage rate is $w = \$ 10$ and the rental rate of capital is $r = \$ 20$ . What is the most efficient combination of labor and capital $( L , K )$ that also results in a total cost level of exactly $1,200?

• A) (20, 50)
• B) (25, 47.5)
• C) (30, 45)
• D) (40, 40)

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