Suppose that production for good X is characterized by the following production function, Q = K0.5L0.5, where
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Suppose that production for good X is characterized by the following production function, Q = K0.5L0.5, where K is the fixed input in the short run. If the per-unit rental rate of capital, r, is $86.80 and the per-unit wage, w, is $20, then the average total cost of using 25 units of capital and 49 units of labor is:
Multiple Choice
$5.
$75.
$90.
There is insufficient information to determine the average total costs.
Related Book For
Managerial Economics and Business Strategy
ISBN: 978-0073523224
8th edition
Authors: Michael Baye, Jeff Prince
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