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 $15 and the per-unit wage,w,is $5,then the average fixed cost of using 16 units of capital and 25 units of labor is:
A) $9.
B) $12.
C) $56.
D) There is insufficient information to determine the average fixed costs.
Correct Answer:
Verified
Correct Answer:
Verified
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