# Marginal cost analysis

18. If the production function is Q = K^5L^5 and capital is fixed at 4 units, then the average product of labor when L = 25 is (hint: raising a variable to the 0.5 power is the same as taking the square root):

a) 2/5.

b) 1/5.

c) 10.

d) none of the above.

20. The change in total revenue attributable to the last unit of an input is the:

a) Marginal product.

b) Average price.

c) Marginal revenue.

d) Marginal return.

22. You are a manager in a perfectly competitive market. The price in your market is $14. Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q^2. What price should you charge in the short-run?

a) $12.

b) $14.

c) $16.

d) $18.

23. You are the manager of a firm that sells its product in a competitive market at a price of $40. Your firm's cost function is C = 60 + 4Q^2. Your firm's maximum profits are

a) 36.

b) 60.

c) 40.

d) 80.

24. For the production function Q = 5.2K + 3.8L, if K = 16 and L = 12, we know that MPL is:

a) 16.

b) 5.2.

c) 3.8.

d) 12.

https://brainmass.com/economics/perfect-competition/marginal-cost-analysis-124517

#### Solution Preview

Answer 18: (A)

Q=K^0.5L^0.5

Putting K=4 and L=25 we get

Q = 2x5 = 10

Average Product of Labor = 10/25 = 2/5

Answer 20: ...

#### Solution Summary

The solution answers a number of economics questions related to marginal analysis.