Suppose That Production for Good X Is Characterized by the Following

question 140

Multiple Choice

Suppose that production for good X is characterized by the following production function,Q = K^0.5L^0.5,where K is the fixed input in the short run.If the per-unit rental rate of capital,r,is $25 and the per-unit wage,w,is $15,then the fixed cost of using 81 units of capital and 9 units of labor is:

• A) $2,160.
• B) $2,025.
• C) $135.
• D) There is insufficient information to determine the fixed costs.

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Definitions:

Higher Prices

denotes an increase in the cost required to purchase goods or services, often due to factors like inflation, increased demand, or higher production costs.

Given Level

A specific, predefined stage or condition used as a reference point.

Product Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that producers are willing to supply.

Production Technology

The methods, equipment, and processes used to create goods or services, often involving innovations that improve efficiency.