A firm's production function is given by Q = KL, where MPL = K and MPK = L. The wage rate (W) = $50 and the rental rate per unit of capital (R) is $12.50. In the short run, capital (K) is fixed at 10 units. The short-run average total cost of producing 100 units of output is ______, and the long-run average total cost of producing 100 units of output is ______.
| A. |
$14.75; $9 |
| B. |
$14.75; $8.80 |
| C. |
$6.25; $4.20 |
| D. |
$6.25; $5 |