The combination of inputs is optimal
A) at points of tangency between isoquants and isocosts.
B) if the marginal revenue product is equal to the marginal resource cost for all inputs.
C) if the marginal rate of technical substitution between every pair of inputs is equal to the ratio of the prices of those inputs.
D) All of the above are correct.

Question

Quizplus · Accepted Answer

All of the statements describe conditions for optimal input combinations in production: tangency between isoquants and isocosts, equality of marginal revenue product and marginal resource cost, and equality of the marginal rate of technical substitution to the input price ratio.

The Combination of Inputs Is Optimal