Suppose That a Firm's Production Function of Output Q Is $L = \sqrt { \frac { w Q } { 25 r } }$

question 27

Multiple Choice

Suppose that a firm's production function of output Q is a function of only two inputs, labor (L) and capital (K) and can be written Q = 25LK with marginal products MP_L = 25K and MP_K = 25L. Letting the wage rate for labor be w and the rental rate of capital be r, the equation for the firm's demand for labor would be:

• A) \(L = \sqrt { \frac { w Q } { 25 r } }\)
• B) \(L = \sqrt { \frac { 25 r } { w Q } }\)
• C) \(L = \sqrt { \frac { r Q } { 25 w } }\)
• D) \(L = \sqrt { \frac { 25 w } { r Q } }\)

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Definitions:

Position Power

The authority or influence granted to an individual or role by virtue of their positional status within an organizational hierarchy.

Relationship-oriented

A focus on building and maintaining strong interpersonal connections within an organization.

Task-oriented

Focusing primarily on completing tasks efficiently and effectively, usually with specific goals and processes in mind.

LPC

The Least Preferred Co-worker scale, a tool used in Fiedler's contingency model to determine an individual's leadership style based on how they view the least favorable person to work with.