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 quantity of output using three units of labor is ____.
A) 32
B) 18
C) 8
D) 2

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 quantity of output using three units of labor is ____.
A) 32 
B) 18 
C) 8 
D) 2

Quizplus · Accepted Answer

The Answer is B

A Firm with a Production Function Q = KL (Where