A Firm Has the Production Function Q = X^1/2₁X₂

question 15

Multiple Choice

A firm has the production function Q = X^1/2₁X₂.In the short run it must use exactly 35 units of factor 2.The price of factor 1 is $105 per unit and the price of factor 2 is $3 per unit.The firm's short-run marginal cost function is

• A)MC(Q)=105Q^-1/2.
• B)MC(Q)= 6Q/35.
• C)MC(Q)= 105 + 105Q2.
• D)MC(Q)= 3Q.
• E)MC(Q)= 35Q^-1/2.

---

Definitions:

Process Costing System

A method of costing used where identical or similar items are produced in mass, costs are accumulated for a fixed period and assigned to all units produced.

FIFO Method

"First In, First Out" inventory valuation method where goods purchased or produced first are sold or used first.

Inventory Costing

A method used to assign costs to inventory items, which affects the cost of goods sold reported and the inventory's valuation on the balance sheet.

General Journal Entries

Accounting records that document all the financial transactions of a company, used to transfer information to the master ledger.