By Expressing the Cost-Minimizing Condition as MPK/MPL = PK/PL,we Are

question 67

Multiple Choice

By expressing the cost-minimizing condition as MPK/MPL = PK/PL,we are able to see

• A)how the firm determines its profit-maximizing output.
• B)how the firm can adjust the marginal products of the factors of production to the prices of the factors given by the market.
• C)that the capital-labour ratio is fixed.
• D)that the ratio of factor prices is constant over time.
• E)that the firm is producing at a lower cost if the left-hand side of the equation is greater than the right-hand side.

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Definitions:

Low-value Group

A segment of the market or population perceived to have less purchasing power or economic importance.

Direct Price Discrimination

A pricing strategy where a seller charges different prices to different customers for the same product or service, based explicitly on the customer's willingness to pay.

Indirect Price Discrimination

A pricing strategy where different prices are charged for the same product or service in different markets or segments, not directly by customer characteristics.

Decreasing Returns

Refers to a situation in which adding more of a production factor, such as labor or capital, results in progressively smaller increases in output.