Refer to the Following

question 13

Multiple Choice

Refer to the following:
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:

Future Value

The value of an investment at a specified date in the future, taking into account factors like interest rates or dividends.

Compounded Annually

The process of adding interest to the initial amount of an investment, where the interest earned each year is added to the principal.

Invested

Invested pertains to the funds that have been allocated into financial instruments, assets, or business ventures with the goal of earning a return.

Rate of Return

A positive or negative variation in an investment’s worth over a set schedule, expressed as a percentage of what the investment initially cost.