A Firm's Production Function Is Given by Q = KL

Multiple Choice

A firm's production function is given by Q = KL, where MP_L = K and MP_K = L. The wage rate (W) = $50, and the rental per unit of capital (R) is $12.50. In the short run, capital (K) is fixed at 10 units. The short-run average total cost of producing 100 units of output is _____, and the long-run average total cost of producing 100 units of output is _____.

A) $14.75; $8.80
B) $6.25; $5
C) $6.25; $4.20
D) $14.75; $9