Multiple Choice
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 $25 and the per-unit wage, w, is $15, then the average variable cost of using 81 units of capital and 9 units of labor is
A) $5.
B) $75.
C) $80.
D) there is insufficient information to determine the average variable costs.
Correct Answer:
Verified
Correct Answer:
Verified
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