Refer to the Following Graph

question 1

Multiple Choice

Refer to the following graph.The price of capital (r) is $20. What combination of K and L should the firm choose to produce 14,000 units of output at the lowest cost?

• A)180K,120L
• B)180K,0L
• C)60K,120L
• D)90K,60L
• E)none of the above

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Definitions:

Retained Earnings

The amount of net profit remaining for the company after distributing dividends to its stockholders.

Note Payable

A written promise to pay a specified amount of money, along with interest, by a certain date.

Interest Expense

The cost incurred by an entity for borrowed funds, recognized in the income statement.

Income Statement

A financial report that shows the revenue, expenses, and profit or loss of a business over a specific period of time.