In the Graph Below,the Price of Capital Is $500 Per

question 58

Multiple Choice

In the graph below,the price of capital is $500 per unit.Which of the following combinations of capital and labor lies on the expansion path?

• A)500L,100K
• B)800L,160K
• C)1100L,220K
• D)both a and b
• E)none of the above

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Definitions:

Terms of Trade

The ratio of an index of a country's export prices to an index of its import prices, used to measure the relative trading advantage or disadvantage.

Consumption

The use of goods and services by households, constituting one of the primary components of GDP.

Developing Nations

Countries with a lower living standard, undeveloped industrial base, and low Human Development Index (HDI) relative to other countries.

Industrially Advanced Nations

Countries that have highly developed economies, characterized by significant industrial growth and high levels of income.