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Inflation - Inflation is the rise in the prices of goods and services of daily needs e.g food, transport etc. Inflation decreases the purchasing power of the currency which raise prices of goods and services.

Hyper Inflation - Hyper inflation is the rapid increase in the prices of goods and services. An economy is said to be in hyper inflation if the prices of goods and services in an economy raise by 50% in a month. While in inflation the rise in the prices of goods and services is not so high.

Venezuela began continuously experiencing inflation from 1983. But Inflation rates increased highly from 2013 under Nicolás Maduro government, and continued to increase in the following years.In 2014, the annual inflation rate reached 69%. In 2015, the inflation rate was 181%. The rate reached 800% in 2016. In 2017 4,000% ,and about 1,700,000% in 2018.This hyperinflation in Venezuela is mainly caused due to the heavely printing of money. This growth in the money supply accelerated during the beginning of Maduro's presidency, which increased price inflation in the country. The money supply of the bolívar fuerte [monetary unit of Venezuela] in Venezuela was increased 64% in 2014, Thus due to the rapidly decreasing value of the bolívar fuerte the prices of the commodities rise in Venezuela which increased the inflation.

The causes of hyperinflation in Venezuela is due to heavy printing of money which increase the suppy of money in economy and increase the demand in economy which make goods expensive, Rise in the government spending in excess of government revenue, decrease in the interest rates by the central bank which make spending more attractive than saving and other political reasons like curruption make the Venezuela economy to go in inflation.

The inflation in Venezuela has severely effected to the people and businesses. The inflation has cuts the real value of the retired people pensions and other savings, inflation makes the business exports less price competitive in world markets. Due to inflation full tank of petrol is around 5p — 20 times less than a bottle of water but production is now so inefficient that the country is importing oil.

The solutions to overcome the inflation in Venezuela is to control the money supply in the economy because there is a close link between money supply and inflation, Higher rates of income tax could decrease the spending and it will decrease the demand of commodity in the economy which will make it less costly, increase in the interest rates by the central bank will make saving more attractive.

Conclusion - The inflation in Venezuela rise due to excess spending of government in excess of its revenue which make the government treasury empty and to fill its treasury government started printing excess money which cause inflation and later hyper inflation in Venezuela. So the government of a country should not print excess money to increase its spending.

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It is given that marginal product from capital is 10 times of that of marginal product from labor while cost of capital is only 2.5 times of thay of wage rate. Thus firm must use more of capital and less of labor to cost minimize.

Option B and C interpret the same results.