The total cost of producing a given level of output is:
A) maximized when a corner solution exists.
B) minimized when the ratio of marginal product to input price is equal for all inputs.
C) minimized when the marginal products of all inputs are equal.
D) minimized when marginal product multiplied by input price is equal for all inputs.

Question

Quizplus · Accepted Answer

The total cost of producing a given level of output is minimized when the ratio of marginal product to input price is equal for all inputs. This is a reflection of the principle of cost minimization where firms allocate their resources in a way that equalizes the marginal benefit per dollar spent on each input, ensuring the most efficient use of resources.

The Total Cost of Producing a Given Level of Output