Asked by Alexandra Barrett on May 07, 2024

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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.
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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.