The "equal bang per buck" condition refers to the firm equating:
A)marginal revenue with marginal cost.
B)the marginal productivity of the last dollar spent on labor with the marginal productivity of the last dollar spent on capital.
C)the marginal productivity of capital with the marginal productivity of labor.
D)the cost of capital with the cost of labor.

Question

Quizplus · Accepted Answer

The "equal bang per buck" condition refers to the efficiency in resource allocation where a firm aims to equalize the marginal productivity per dollar spent across all inputs. This means that the marginal productivity of the last dollar spent on labor should be equal to the marginal productivity of the last dollar spent on capital, ensuring that the firm is getting the maximum output for its expenditure on different inputs.

The "Equal Bang Per Buck" Condition Refers to the Firm