Output Is Produced According to Q = 4L + 6K,where

question 23

Multiple Choice

Output is produced according to Q = 4L + 6K,where L is the quantity of labor input and K is the quantity of capital input.If the price of K is $12 and the price of L is $6,then the cost-minimizing combination of K and L capable of producing 60 units of output is:

• A) L = 5 and K = 6.66.
• B) L = 7.5 and K = 5.
• C) L = 6 and K = 6.
• D) L = 0 and K = 10.
• E) L = 15 and K = 0.

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of goods and services produced within a country in a given period, reflecting the actual productivity.

Price Level

A comprehensive average of prices for all goods and services within the economic output.

Inflation

The surge in the overall pricing structure for goods and services, undermining the efficiency of spending.

Goods and Services

The outputs produced by the economy, where goods are tangible objects and services are intangible offerings that satisfy consumer needs or wants.