If Output Is Produced According to Q = 4L

question 54

Multiple Choice

If output is produced according to Q = 4L + 6K, the price of K is $12, and the price of L is $20, then the cost-minimizing combination of K and L capable of producing 96 units of output is

• A)L = 20 and K = 12.
• B)L = 0 and K = 16.
• C)L= 24 and K = 16.
• D)L =12 and K = 8.
• E)L = 24 and K = 0.

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Definitions:

Fair Value

Fair value is an estimate of the price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.

Share Capital

The funds that a company raises by issuing shares of stock, representing ownership in the company.

Retained Earnings

Refers to the portion of net earnings not distributed as dividends to shareholders but retained by the company to be reinvested in its core business or to pay debt.

Business Combination Valuation Reserve

A reserve set up during the accounting for a business merger or acquisition, accounting for differences in asset valuations and liabilities assumed.