For a Firm with Only Two Inputs,capital and Labour,the Condition

question 7

Multiple Choice

For a firm with only two inputs,capital and labour,the condition MP_K/MP_L = P_K/P_L guarantees that the firm is

• A)at its profit-maximizing output but is not necessarily minimizing its costs.
• B)minimizing its costs but is not necessarily maximizing its profits.
• C)technically efficient but not economically efficient.
• D)economically efficient but not technically efficient.
• E)at its profit-maximizing and cost-minimizing level of output.

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Definitions:

Income Before Taxes

Earnings of a company before income tax expense is deducted, indicating its profitability from operations.

Operating Expenses

Costs associated with running a company’s day-to-day operations, such as salaries, rent, and utilities, but not including cost of goods sold.

Cost of Goods Sold

The immediate financial outlays associated with the creation of a company's sold products.

Net Sales

The amount of a company's gross sales minus returns, allowances, and discounts.