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

question 6

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 spends exactly $1000 in the most efficient way possible. How much output can the firm produce?

• A) 450
• B) 800
• C) 1000
• D) 1250

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