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 variable cost of using 81 units of capital and 9 units of labor is:
A. $135.
B. $2,160.
C. $2,025.
D. There is insufficient information to determine the variable costs.
Answer: A
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