Suppose MPL = 0

question 78

Multiple Choice

Suppose MPL = 0.5 ∗ (q/L) and MPK = 0.5 ∗ (q/K) .In the long run,the firm will hire equal amounts of capital and labor

• A)all of the time.
• B)only when w = r.
• C)only when w = 0.5 ∗ r.
• D)at no point in time.

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Definitions:

Risk-Averse

A characteristic describing an investor or decision-maker who prioritizes avoiding loss over making a gain, typically favoring safer investments.

Mean-Standard Deviation Graph

The mean-standard deviation graph is a visual representation used in finance to display expected returns (mean) of an investment against its risk (standard deviation).

Utility Function

A mathematical representation in economics that defines the level of satisfaction or utility an individual receives from different bundles of goods and services.

Expected Return

The average of the probability distribution of possible returns for an investment, symbolizing its anticipated profitability.