-Refer to Figure 8.3.If the wage rate is $5 and the rental rate of capital is $10,what is the lowest cost of producing 30 units of output?
A) $350
B) $345
C) $250
D) $300

Question

-Refer to Figure 8.3.If the wage rate is $5 and the rental rate of capital is $10,what is the lowest cost of producing 30 units of output?
A) $350 
B) $345 
C) $250 
D) $300

Quizplus · Accepted Answer

The lowest cost of producing 30 units of output can be determined by finding the point on the isoquant for 30 units of output that is tangent to the lowest possible isocost line. Given the wage rate is $5 and the rental rate of capital is $10, the firm will choose the combination of labor and capital that minimizes cost. Without the specific isoquant and isocost lines from Figure 8.3, we rely on the provided answer choices, where $345 is identified as the correct answer, indicating it represents the cost-minimizing combination of inputs for producing 30 units of output.