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 $15 and the per-unit wage, w, is $25, then the average fixed cost of using 9 units of capital and 81 units of labor is:
A. $75.
B. $80.
C. $5.
D. There is insufficient information to determine the average fixed costs.
Answer: C
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Consumer surplus:
a. does not exist in equilibrium. b. is illustrated by the area under the demand curve and above the market price. c. is illustrated by the area under the demand curve and below the market price. d. is illustrated by the area above the supply curve and under the demand curve.
The national debt is the
a. result of previous budget deficits. b. result of rising interest rates. c. result of previous budget surpluses. d. result of efficient balancing.
A weaker dollar would be a good policy if the U.S. government wanted to:
A. increase exports and reduce the trade balance. B. reduce imports and increase the trade balance. C. reduce the trade balance and lower inflation. D. increase the trade balance and lower inflation.
An increase in the dollar per euro exchange rate will result in
A. a decline in the quantity demanded for dollar. B. an inward shift of the supply curve of euro. C. an outward shift of the demand curve for dollar. D. a decline in the quantity demanded for euro.