The Equation MP_L/P_L = MP_C/P_C

question 94

Multiple Choice

The equation MP_L/P_L = MP_C/P_C:

• A) designates the MR = MC level of output.
• B) assumes imperfect competition in the hiring of labor and capital.
• C) is a sufficient condition for the maximization of profits.
• D) is a necessary,but not sufficient,condition for the maximization of profits.

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Definitions:

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy an asset at a specified price within a particular time period.

Out-Of-The-Money

A term used to describe an option contract that would not result in a profit if exercised at the current market level.

Convertible Bond

A type of bond that can be converted into a predetermined amount of the company's equity, usually at the option of the bondholder.