When a Production Function Can Be Expressed as ,The

question 9

Multiple Choice

When a production function can be expressed as ,the relationship between capital and labor in the production function is that

• A) capital and labor are perfect substitutes, and the isoquants are linear.
• B) capital and labor must be combined in fixed proportions, and the isoquants are L-shaped.
• C) capital and labor are substitutable, and the isoquants are convex to the origin.
• D) capital and labor are perfect substitutes, and the isoquants are L-shaped.

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Definitions:

Internal Rate

Often refers to the internal rate of return (IRR), which is the discount rate that makes the net present value (NPV) of all cash flows from a particular project zero.

Working Capital

The difference between a company's current assets and current liabilities.

Net Present Value

A method of valuing a series of future cash flows by discounting them back to their present value using a specified rate of return.

Working Capital

Working Capital is the difference between a company's current assets and current liabilities, indicating short-term financial health.