A Firm's Production Function Is Given by Q = KL

question 28

Multiple Choice

A firm's production function is given by Q = KL. The marginal products of labor and capital are, respectively, MP_L = K and MP_K = L. The wage rate of labor is w = $10 and the rental rate of capital is r = $20. The firm wants to produce 1,800 units of output in the most efficient way possible. How much does the firm spend?

• A) $2,000
• B) $1,300
• C) $1,200
• D) $1,100

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Definitions:

Stimulus Ambiguity

A situation where a stimulus lacks clear definition or can be interpreted in multiple ways, leading to uncertainty in perception.

Cognitive Interpretation

The mental process of assigning meaning to sensory information and experiences, affecting perception and understanding.

Sensory Readiness

The state of being prepared to receive and process sensory information effectively, enhancing learning and interaction with the environment.

Gestalt Principle

A theory in psychology that proposes the human brain perceives whole objects rather than merely the sum of their parts.