The Production Function for a Company Is , Where

question 29

Multiple Choice

The production function for a company is , where P is the amount produced given x units of labor and y units of equipment. Each unit of labor costs $900 and each unit of equipment costs $400. Assuming the goal of the company is to maximize production given a fixed budget of $40,000, what is the meaning of the Lagrange multiplier ?

• A)The additional units that can be produced if the budget is increased by $1
• B)The amount it would cost the company to produce one more unit
• C)The additional units of labor allowed if the budget is increased by $1
• D)The amount it would cost the company to obtain one additional unit of equipment

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Definitions:

Usage Rate

The frequency at which a consumer uses a product or service over a specific period, indicating their level of engagement or reliance on it.

Loyalty

The quality of being faithful to commitments or obligations, often used to describe customer behavior and the likelihood of continued patronage or support.

Strategic Fit

The alignment between an organization's strategic goals and the resources and capabilities at its disposal to achieve them.

Target Market

A specific group of consumers at which a product or service is aimed, characterized by shared demographic or psychographic traits.