Suppose a firm's total cost of production is $40,000 per week,the wage rate is $1,000 per week and the cost of capital is $2000.The firm's cost function would be written as
A) L = 40 -.5K
B) K = 40 - 2L
C) K = 2000 + 1000L
D) K = 40 -.5L

Question

Quizplus · Accepted Answer

The correct answer is D because the cost function is a linear equation that represents the total cost of production as a function of the quantity of labor (L) and capital (K) used. The equation is written as TC = 40,000 - 500L + 2,000K, where TC is the total cost of production, L is the quantity of labor used, and K is the quantity of capital used.

Suppose a Firm's Total Cost of Production Is $40,000 Per