In the Following Graph,the Price of Labor Is $15 Per

question 50

Multiple Choice

In the following graph,the price of labor is $15 per unit.Which of the following combinations of capital and labor lies on the expansion path?

• A)15K,40L
• B)18K,40L
• C)30K,100L
• D)21K,60L
• E)none of the above

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Definitions:

Price System

An economic mechanism that uses prices arising from supply and demand interactions to communicate information to help guide the allocation of resources.

Scarce Goods

Goods that are limited in supply in comparison to their demand, necessitating allocation mechanisms.

Automatically Distributes

Refers to processes or systems that allocate resources, duties, or information without the need for human intervention.

Price Rationing

The process by which the market system allocates goods and services to consumers when quantity demanded exceeds quantity supplied.