Question

Suppose that Hannah and Sam have the production function         Q=F(L,K)Q=F(L,K)         Q=10L0.5K0.5.Q=10L0.5K0.5. The wage rate is $1,000...

Suppose that Hannah and Sam have the production function

        Q=F(L,K)Q=F(L,K)

        Q=10L0.5K0.5.Q=10L0.5K0.5.

The wage rate is $1,000 per week and a unit of capital costs $4,000 per week.

a. True or false? If we plot L along the horizontal axis and K along the vertical axis, then Hannah and Sam's output expansion path is a straight line that passes through the origin and has a slope of 0.25.

     TrueFalse

b. What is their cost function? Choose from the options below.

    A:400QB:200Q2C:2,000Q0.5D:200Q+400Q2A: 400QB: 200Q2C: 2,000Q0.5D: 200Q+400Q2

     (Click to select)Formula DFormula BFormula AFormula C

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