Which of the following statements best exemplifies the firm's constrained minimization problem?
A) The firm desires to produce a given quantity of output by choosing values of W and R that minimize RK + WL.
B) The firm desires to minimize output subject to the constraint that C = RK + WL.
C) The firm desires to produce as much output as possible by choosing values of L and K that minimize RK + WL.
D) The firm desires to produce a given quantity of output by choosing values of L and K that minimize RK + WL.

Question

Quizplus · Accepted Answer

The firm's constrained minimization problem typically involves minimizing cost while producing a given level of output. In this context, minimizing RK + WL (where R is the cost of capital, K is the amount of capital, W is the wage rate, and L is the amount of labor) for a given output level accurately reflects this problem. Choices A, B, and C do not correctly represent the constrained minimization problem as they either do not focus on minimizing cost for a given output or misstate the objective.

Which of the Following Statements Best Exemplifies the Firm's Constrained