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:

Merge

The combination of two or more entities (such as companies) into a single entity, often with the goal of enhancing competitive advantage or expanding market reach.

Vertically Integrated

A company's consolidation of all or part of the production process and supply chain within itself, controlling different stages of production usually to increase the company's power in the marketplace.

Competitive Market

A market structure where numerous producers compete to sell their goods or services to many buyers, leading to efficient pricing and innovation.

Market Price

The present cost at which a product or service is available for purchase or sale in the marketplace.