## Questions 1-17: Multiple Choice

# | Form A | Form B |
---|---|---|

1 | C | C |

2 | B | A |

3 | A | D |

4 | D | B |

5 | D | A |

6 | C | C |

7 | A | D |

8 | D | D |

9 | C | A |

10 | A | A |

11 | A | D |

12 | C | C |

13 | A | B |

14 | A | B |

15 | C | C |

16 | A | C |

17 | D | B |

## Problem 18

Done in class.

**a)** We plug *K=25* into the production function, obtaining
short-run production function *Q(L) = f(L,25) = 5 + 10L ^{1/2}*.

**b)** Up to *Q(0) = 5* robots may be produced without using any labor.

**c)** With a capital rental rate of $50 and 25 units of capital, the fixed
cost of capital is *25 x 50 = 1250*. The variable cost is zero since no labor is
needed for up to 5 robots. This means the total cost is TC = $1250 and the average
total cost is *AVC = 1250/Q*. Graph these to obtain the answer.