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

question 45

Multiple Choice

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

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

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Definitions:

Option Agreement

A contract that grants the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

Warrant

A financial instrument that gives the holder the right, but not the obligation, to buy shares of a company at a specific price before a certain date.

Arbitrage Opportunity

A situation where it's possible to simultaneously purchase and sell an asset or security and profit from the price difference.

Warrant

A financial instrument that confers the right to buy a security, typically a stock, at a specific price before a certain date.