Assume the Backwoods Shoe Company Hires Three Inputs: Labor (L)

question 24

Multiple Choice

Assume the Backwoods Shoe Company hires three inputs: labor (L) , capital (K) , and land (A) to produce shoes (X) . Which of the following conditions must be met so that the firm is using the optimal, or least costly, combination of inputs?

• A) MPL = MPK = MPA
• B) PL = PK = PA
• C) MPL/PL = MPK/PK = MPA/PA
• D) MPL = MPK = MPA = 1/PX

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Definitions:

Problem Recognition

The initial stage of the buying process where a consumer identifies a need or problem that can be satisfied by purchasing a product or service.

Cognitive Dissonance

The mental unease felt by a person when they simultaneously possess conflicting beliefs, ideas, or values.

Internal Search

The process by which consumers use their own memory and knowledge to identify possible choices in purchasing decisions.

External Search

The process consumers engage in by seeking information from sources outside of their personal knowledge base to make informed purchase decisions.