Suppose That a Firm's Production Function of Output Q Is

question 8

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. Let the wage rate for labor be w = 1 and the rental rate of capital be r= 1. If the firm produces 100 units of output, how many units of labor will it use?

• A) 1
• B) 2
• C) 3
• D) 4