Assume the Backwoods Shoe Company Hires Three Inputs: Labor (L)

question 184

Multiple Choice

Assume the Backwoods Shoe Company hires three inputs: labor (L) , capital (K) , and land (A) to produce shoes (X) . Which of the following conditions must be met so that the firm is using the optimal, or least costly, combination of inputs?

• A) MP_L = MP_K = MP_A
• B) P_L = P_K = P_A
• C) MP_L/P_L = MP_K/P_K = MP_A/P_A
• D) MP_L = MP_K = MP_A = 1/P_X

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Definitions:

Nonmonetary Award

A reward given to employees that does not involve financial compensation, often used to acknowledge accomplishments or motivate performance.

Stock Bonuses

A form of incentive compensation where employees are awarded shares of the company's stock, aligning employee interests with shareholder interests.

Company Picnic

A social event organized by a company for its employees, often held outdoors and including food and recreational activities, intended to foster team spirit and camaraderie.

Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell shares of a company at a specified price before a certain date.