The Least-Cost Combination of Inputs for a Specified Output

question 29

Multiple Choice

The least-cost combination of inputs for a specified output:

• A)can be read directly from the production-function schedule.
• B)will be independent of variations in the price of the factors used.
• C)is indeterminate, as is shown by the production-function schedule, which indicates a number of ways of producing any given output.
• D)is determined by using the prices of the factors to compute the cost of the different input combinations that will produce the specified output.
• E)will shift when the prices of the factors change, so that the factor whose price has gone up will be used more to maintain quality.

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Definitions:

Net Profit Margin

A profitability ratio that measures the percentage of each sales dollar that remains as profit after all expenses, including taxes, have been paid.

Net Income

The total profit of a business after subtracting all expenses from total revenues.

Operating Income

The profit realized from a business's operations after deducting operating expenses such as wages, depreciation, and cost of goods sold.

Inventory Turnover

A financial ratio that measures the number of times a company’s inventory is sold and replaced over a specific period, reflecting the efficiency of inventory management.