3. Suppose a production function is q = K¹2113 and in the short run capital (K) is fixed at 100. If the wage is $10 and the rental rate on capital is $20, the fixed cost is a. $2,000 b. $200 c. $20,000 d. $0

3. Suppose a production function is q = K¹2113 and in the short run capital (K) is fixed at 100. If the wage is $10 and the rental rate on capital is $20, the fixed cost is a. $2,000 b. $200 c. $20,000 d. $0

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 1.5CE

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Concept explainers

Short-Run Costs and Long-Run Costs

Cost of short-run and the long-run is an economic term that describes the cost involved in the production of goods in a firm in the short as well as long period.

Question

3. Suppose a production function is q = K¹/271/3 and in the short run capital (K) is fixed at 100. If the wage is $10 and the
rental rate on capital is $20, the fixed cost is
a. $2,000
b. $200
c. $20,000
d. $0

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