36

Suppose your production function is given by: F(L,K)=Q=3L+2K. The wage rate is $2 and the price of capital is $2. In the long-run, what is the cost-minimizing level of L and K to produce Q=18 units of output?

Select one:

a. L=4; K=3

b. L=2; K=6

c. L=6; K=0

d. L=0; K=9

37

Suppose the MPL function is upward sloping (positive slope). The corresponding Production function AND the Marginal Cost (MC) function are:

Select one:

a. Production: Upward sloping, increasing at a decreasing rate; MC is also upward sloping

b. Production: Upward sloping increasing at an increasing rate; MC is downward sloping

c. Production: Upward sloping, increasing at a decreasing rate; MC is downward sloping

d. Production: Upward sloping increasing at an increasing rate; MC is upward sloping

e. None of the above