Suppose That Production for Good X Is Characterized by the Following

question 70

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 $15 and the per-unit wage,w,is $25,then the average fixed cost of using 9 units of capital and 81 units of labor is:

• A) $5.
• B) $75.
• C) $80.
• D) There is insufficient information to determine the average fixed costs.

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