Refer to Figure 5

question 38

Multiple Choice

Refer to Figure 5.1.Observe the three isoquants depicted and determine which of the following statements is true.

• A)K and L are substitutes in each of the three cases.
• B)K and L are substitutes in cases (1)and (2).
• C)K and L are substitutes in cases (2)and (3).
• D)K and L are substitutes in cases (1)and (3).

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Definitions:

Break-even Price

The price at which total costs and total revenue are equal, resulting in no net gain or loss.

Costing

The process of determining the cost associated with producing or providing a product or service.

Mark-up

The variance between the price at which a good or service is purchased and its retail price, shown as a proportion of the purchase cost.

Selling Price

The amount of money for which something is sold, not necessarily equal to its cost to produce.