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:

Shares Outstanding

The total number of a company's shares currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Debt Outstanding

Debt outstanding refers to the total amount of debt that a company or government has yet to repay to creditors, including all principal and interest amounts.

Stock Split

A corporate action that increases the number of a company's outstanding shares by dividing each share, which can make the stock more affordable to investors.

Market Value

The estimated amount for which an asset or company could be sold on the open market.