A Firm Has the Production Function Q = KL, Where

question 33

Multiple Choice

A firm has the production function Q = KL, where K is the amount of capital and L is the amount of labor it uses as inputs.The cost per unit of capital is a rental fee r and the cost per unit of labor is a wage w.The conditional labor demand function L(Q, w, r) is

• A)Qwr.
• B)the square root of Qr/w.
• C)Qw/r.
• D)the square root of Qw/r.
• E)Q/wr.

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Definitions:

Note Payable

A written agreement where one party promises to pay another party a definite sum of money either on demand or at a specified future date.

Maturity

The date on which the principal amount of a financial instrument, such as a bond or loan, becomes due and payable.

Non-current Liability

A financial obligation that is not due for settlement within one year or the normal operating cycle of the business, often including long-term loans, bonds payable, and lease obligations.

Current Liability

Financial obligations that a company is required to pay within one year or within its normal operating cycle.