Asked by Alexandra Barrett on May 07, 2024
Verified
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.
Price L
A symbolic representation often used in economic models to denote the price of a particular good or service, labeled "L".
Output
The amount of goods or services produced by a company, industry, or economy.
- Utilize cost reduction principles to ascertain the ideal input combination for achieving a certain production output.
Verified Answer
BW
Bruce WhitneyMay 08, 2024
Final Answer :
B
Explanation :
Given the output formula and the prices of K and L, the most cost-effective strategy to produce 96 units of output involves using only K, as it has a lower cost per unit of output compared to L. This eliminates the need for L, leading to the selection of option B, which specifies using 16 units of K and 0 units of L to achieve the desired output.
Learning Objectives
- Utilize cost reduction principles to ascertain the ideal input combination for achieving a certain production output.