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    Marginal cost analysis

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    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.

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    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.

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