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 $125, then the average fixed cost of using 16 units of capital and 25 units of labor is:
A. $12.
B. $56.
C. $9.
D. There is insufficient information to determine the average fixed costs.
Answer: A
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When the Fed eases U.S. monetary policy, domestic interest rates ________, making U.S. assets relatively less attractive to foreign investors, and ________ the equilibrium exchange rate.
A. rise; increasing B. fall; decreasing C. fall; increasing D. rise; decreasing
According to the "rational expectations" school of thought in macroeconomics, the short-run Phillips curve is ________ in face of unanticipated changes in monetary policy
A) negatively sloped B) vertical C) positively sloped D) horizontal
If the government set a price ceiling of 25 cents for a loaf of bread, the most likely consequence would be
A. a surplus of bread. B. no one would go hungry. C. most Americans would put on weight. D. a shortage of bread.
xplain how technology can shift the supply curve to the right.
What will be an ideal response?