Firm X Produces Output $x$ And Firm Y Produces Output $y$ Using Capital, K, and Labor, L, as Inputs

question 13

Multiple Choice

Firm X produces output $x$ and Firm Y produces output $y$ using capital, K, and labor, L, as inputs. Firm X has marginal rate of technical substitution MRTS^x_K,L = K_x/L_x, while firm Y has marginal rate of technical substitution MRTS^y_K,L = 9K_y/L_y. Which of the following allocations satisfies input efficiency?

• A) Firm X has 5 units of K and 3 units of L, and Firm Y has 3 units of K and 1 unit of L.
• B) Firm X has 5 units of K and 5 units of L, and Firm Y has 1 unit of K and 9 units of L.
• C) Firm X has 9 units of K and 1 units of L, and Firm Y has 5 units of K and 5 units of L.
• D) Firm X has 5 units of K and 5 units of L, and Firm Y has 1 unit of K and 3 units of L.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded.

Supply Curve

A graph showing the relationship between the price of a good and the amount of the good that suppliers are willing to sell.

Producer Surplus

The contrast between the expected payment by sellers for a product or service and the real amount they receive.

Demand P

This term seems unclear or incomplete as presented; it possibly refers to "demand price," which is the price at which consumers are willing to buy a specific quantity of goods.