To minimize cost of production at any level of output the monopsonist should continue to substitute labour and capital until

Question

Quizplus · Accepted Answer

The correct condition for minimizing the cost of production is when the ratio of the marginal expense of labor (MEL) to the marginal product of labor (MPL) equals the ratio of the marginal expense of capital (MEK) to the marginal product of capital (MPK). This ensures that the last dollar spent on each input yields the same amount of output, optimizing resource allocation.

To Minimize Cost of Production at Any Level of Output