Suppose That Production for Good X Is Characterized by the Following

question 151

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 variable 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 variable costs.

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