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Suppose That a Firm's Production Function of Output Q Is L=wQ25rL = \sqrt { \frac { w Q } { 25 r } }

Question 27

Multiple Choice

Suppose that a firm's production function of output Q is a function of only two inputs, labor (L) and capital (K) and can be written Q = 25LK with marginal products MPL = 25K and MPK = 25L. Letting the wage rate for labor be w and the rental rate of capital be r, the equation for the firm's demand for labor would be:


A) L=wQ25rL = \sqrt { \frac { w Q } { 25 r } }
B) L=25rwQL = \sqrt { \frac { 25 r } { w Q } }
C) L=rQ25wL = \sqrt { \frac { r Q } { 25 w } }
D) L=25wrQL = \sqrt { \frac { 25 w } { r Q } }

Correct Answer:

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