Which of the Following Conditions Indicate Cost Minimization, Assuming Two

question 23

Multiple Choice

Which of the following conditions indicate cost minimization, assuming two inputs, labour (L) and capital (K) ?

• A) PK · MPK = PL · MPL
• B) MPK/PK = MPL/PL
• C) MPK/PL = MPL/PK
• D) MPL = MPK
• E) PK = PL

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Definitions:

Endowed

Provided with a large amount of a resource or quality, often referring to financial grants given to institutions or individuals.

Units

The basic quantity or measurement, such as meter, kilogram, or liter, in terms of which something is considered or measured.

Quasilinear Utility Functions

Utility functions where consumers' utility is linear in one argument, typically representing money, allowing for easy analysis of changes in wealth.

Edgeworth Box

An Edgeworth Box is a visual representation used in microeconomics to show the distribution of resources or the optimal allocation between two individuals, demonstrating how both can benefit through trade.