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Suppose That a Firm's Production Function of Output Q Is

Question 8

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. Let the wage rate for labor be w = 1 and the rental rate of capital be r= 1. If the firm produces 100 units of output, how many units of labor will it use?


A) 1
B) 2
C) 3
D) 4

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