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 $25 and the per-unit wage, w, is $15, then the average fixed cost of using 81 units of capital and 9 units of labor is:
A. $75.
B. $80.
C. $5.
D. There is insufficient information to determine the average fixed costs.
Answer: A
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and 
and have concluded that the consumer's tastes are quasilinear in 
. Whether
the consumer purchases more or less of 
when the price of 
falls then depends on the size of the substitution effect.
Answer the following statement true (T) or false (F)
Suppose that the capital stock initially is 1000, the depreciation rate is 0.06, and net growth of the capital stock is 120. This makes investment equal to
A) 180. B) 60. C) 127.2. D) 112.8
Use the above table. Assuming constant opportunity costs, the opportunity cost of producing a pound of beef in Argentina is
A) 2 gallons of wine. B) 3 gallons of wine. C) 0.5 gallons of wine. D) 0.33 gallons of wine.
The people of Country X save 10 percent of their income, and the people of Country Y save 25 percent of their income. If these respective saving rates persist forever, will one country or the other enjoy a higher rate of income growth forever? Explain