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The production of sunglasses is characterized by the production function Q(L,K)= 4L1/2K 1/2 . Suppose that...

The production of sunglasses is characterized by the production function Q(L,K)= 4L1/2K 1/2 . Suppose that the price of labor is $10 per unit and the price of capital is $90 per unit. In the short-run, capital is fixed at 2,500. The firm must produce 36,000 sunglasses. How much money is it sacrificing by not having the ability to choose its level of capital optimally? That is, how much more does it cost to produce 36,000 sunglasses the short-run compared to the long-run?

a. $9,000 b. $81,000 c. $225,000 d. $171,000 e. $171,525

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