A firm with a production function Q = KL (where K is units of capital and L is units of labor) has an expansion path that is given by K = 2L. The wage rate (W) is $20 and the rental on capital is $10. Assuming that the firm is using the optimal mix of inputs for any given output level, the average total cost when producing 8 units of output is $____.
A) 10
B) 20
C) 80
D) 40

Question

A firm with a production function Q = KL (where K is units of capital and L is units of labor) has an expansion path that is given by K = 2L. The wage rate (W) is $20 and the rental on capital is $10.  Assuming that the firm is using the optimal mix of inputs for any given output level, the average total cost when producing 8 units of output is $____.
A) 10 
B) 20 
C) 80 
D) 40

Quizplus · Accepted Answer

The Answer of A firm with a production function Q = KL (where K is units of capital and L is units of labor) has an expansion path that is given by K = 2L. The wage rate (W) is $20 and the rental on capital is $10.  Assuming that the firm is using the optimal mix of inputs for any given output level, the average total cost when producing 8 units of output is $____.
A) 10 
B) 20 
C) 80 
D) 40

A Firm with a Production Function Q = KL (Where