(Appendix)At the Least-Cost Combination of Capital and Labor

question 49

Multiple Choice

(appendix) At the least-cost combination of capital and labor:

• A)the marginal rate of technical substitution of labor for capital equals the ratio of the price of labor to the price of capital
• B)the isocost line cuts the isoquant at its lowest point
• C)the capital-labor ratio is equal to the ratio of the price of labor to the price of capital
• D)the isoquant cuts the isocost line at its lowest point

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Definitions:

Production Possibility Frontier

A curve depicting all maximum output possibilities for two or more goods, given a set of inputs.

Capital Stock

Refers to the total amount of physical assets owned by a company that are used in producing goods or services.

Technology

Application of scientific knowledge for practical purposes, especially in industry and improvements in tools, machines, techniques, and processes.

Economic Growth

The increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.