When We Solve the Firm's Cost Minimization Problem by the Method

question 58

Multiple Choice

When we solve the firm's cost minimization problem by the method of Lagrange multipliers, the optimal value of the Lagrange multiplier equals the:

• A) marginal product of labor.
• B) marginal product of capital.
• C) marginal cost of production.
• D) cost-output elasticity.

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Definitions:

Discretionary Fiscal Policy

Discretionary Fiscal Policy involves government action to stimulate or restrain the economy via changes in taxation and spending, based on current economic conditions.

Short-run Phillips Curve

A curve illustrating the inverse relationship between the rate of inflation and the rate of unemployment, showing that lower unemployment in the near term can be associated with higher inflation.

U.S. Economic Data

Statistical information about the United States economy covering various aspects such as employment, GDP, inflation, and more, used for analysis and policy-making.

Passive Macroeconomic Policy

A strategy where the government does not intervene or adjusts its policy measures in response to economic fluctuations.