Question

Suppose that a firm currently produces 100 units using 10 units of K and 14 units of labor per day. The wage rate is $100 and the rental rate is $150 per day. The cost to produce this output is

Answer 1

Answer: $2,900

Explanation:

The cost of this amount of output is:

= (Amount of K used * Rental rate of capital) + (Amount of labor used * wage rate)

= (10 * 150) + (14 * 100)

= 1,500 + 1,400

= $2,900