Which of the following is the correct statement of the marginal rule for optimal input proportions? The input proportion is optimal when A)P_A = P_B. B)MPP_A = MPP_B. C)P_A*MPP_A = P_B * MPP_B. D)P_A/P_B = MPP_A/MPP_B.

Question

Quizplus · Accepted Answer

The correct statement of the marginal rule for optimal input proportions is option D: P_A/P_B = MPP_A/MPP_B. This means that the ratio of the marginal products of inputs must be equal to the ratio of their prices. This condition ensures that the firm is using inputs in the optimal proportion to maximize profits. Option A is incorrect because it does not include the marginal products of inputs. Option B is incorrect because it only considers the marginal product of one input. Option C is incorrect because it is a combination of options A and B, which are both incorrect.

Which of the Following Is the Correct Statement of the Marginal