A Firm's Production Process Uses Labor $L$ , and Capital $K$ , and Materials

question 23

Multiple Choice

A firm's production process uses labor, $L$ , and capital, $K$ , and materials, $M$ , to produce an output, $Q$ according to the function $Q = K L M$ , where the marginal products of the three inputs are $M P _ { L }$ $= K M , M P _ { K } = L M$ , and $M P _ { M } = K L$ . The wage rate for labor is $w = 2$ , the rental rate of capital is $r$ $= 1$ , and the cost of materials is $m = 4$ per unit. What is the long run cost-minimizing level of capital that the firm must use to produce a target level of output, $Q = 1000$ ?

• A) \(K = 5\)
• B) \(K = 10\)
• C) \(K = 20\)
• D) \(K = 40\)

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Definitions:

Viewpoints

Perspectives or angles from which individuals consider or evaluate an issue or topic.

Induction

The process of introducing a new employee to their job and the organization, involving training and orientation.

Adaptation

The process of changing or modifying something to better suit a new environment or conditions.

Synergize

Synergize refers to the process of two or more entities coming together to produce a combined effect greater than the sum of their separate effects, often used in teamwork and collaboration contexts.