Suppose That Production for Good X Is Characterized by the Following

question 5

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 $125,then the average fixed cost of using 16 units of capital and 25 units of labor is:

• A) $9.
• B) $12.
• C) $56.
• D) There is insufficient information to determine the average fixed costs.

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Definitions:

Drawing Account

An account that tracks the amount withdrawn by the owners from the business for personal use.

Credit Balance

The amount appearing on the credit side of a ledger, indicating the total credits exceed the total debits in an account.

Debit Balance

It is the remaining amount owing in an account after all debits and credits have been accounted for, typically found in asset and expense accounts.

Recorded By Credits

Recorded by Credits refers to accounting entries made on the credit side of an account, indicating an increase in liabilities, revenue, or equity, or a decrease in assets.