Refer to the Following Graph

question 34

Multiple Choice

Refer to the following graph.The price of capital r) is $20. Why wouldn't the firm choose to produce 5,000 units of output with the combination at B?

• A)At B,MRTS < 3/2.
• B)At B,MP_K / r > MP_L / w.
• C)At B,MP_L < MP_K.
• D)both a and b
• E)none of the above

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Definitions:

Cash Conversion Cycle

A metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Inventory Collection

The process of organizing and managing products or stock that a company holds for sale to customers.

Inventory Payment

The financial transactions related to the purchasing of inventory, either on a cash or credit basis.

Cash Conversion Cycle

A measurement that gauges the duration required for a business to transform its investments in stock and other assets into cash flows from customer purchases.