Suppose a firm with a production function given by Q = K0.25L0.75 produces 1,500 units of output. The firm pays a wage of $50 per unit and pays a rental rate of capital of $50 per unit.
(Note:
)
To minimize the cost of producing 1,500 units of output, the firm should use:
A) 3 times as many units of labor as units of capital.
B) equal amounts of labor and capital.
C) 1.25 times as many units of capital as units of labor.
D) 16 units of capital and 6,814 units of labor.
Correct Answer:
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