Let a Firm Use Labor (L) and Capital (K) as Its

question 29

Multiple Choice

Let a firm use labor (L) and capital (K) as its only inputs to produce an output, Q. The cost of labor is w = $5 per labor hour and the cost of capital is r = $15 per machine hour. What is the equation of the $1.5-million isocost line?

• A) 1.5m = L + K.
• B) 1.5m = 5L + 15K.
• C) 1.5m = (5L)(15K).
• D) 1.5m = (5L + 15K)Q.

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Definitions:

Establishment Clause

One of two provisions in the First Amendment of the U.S. Constitution that protect citizens’ freedom of religion. It prohibits (i) the establishment of a national religion by Congress and (ii) the preference of one religion over another or of religion over nonreligious philosophies in general.

First Amendment

The part of the United States Constitution that protects freedoms of speech, religion, press, assembly, and petition.

Constitution

The system of fundamental principles according to which a nation, state, corporation, or the like, is governed.

Search Without A Warrant

A law enforcement action to search a person or property without possessing a court-issued warrant, permissible only under certain conditions.