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.

Question

Quizplus · Accepted Answer

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.

If Output Is Produced According to Q = 4L