A firm's optimal input proportions may change if
A)input prices change.
B)the relative marginal productivities of the inputs change.
C)the firm's optimal output level changes.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

All of the above are correct. Input prices affect the cost of production and, therefore, the optimal input proportions. The relative marginal productivities of the inputs affect the firm's production function, and therefore, the optimal input proportions. Finally, changes in the optimal output level will affect the firm's optimal input proportions because it will change the firm's production function and cost structure.

A Firm's Optimal Input Proportions May Change If