In the long run,a profit- maximizing firm producing a given level of output chooses the production method that
A)leads to a flat total cost curve.
B)produces that output at the lowest possible cost.
C)minimizes labour input.
D)maximizes the marginal product of all factors.
E)maximizes the marginal product of labour.

Question

Quizplus · Accepted Answer

A profit-maximizing firm will choose the production method that produces the given level of output at the lowest possible cost. This is because minimizing costs will maximize profits in the long run. Option A is incorrect as a flat total cost curve does not necessarily mean the lowest possible cost. Option C is incorrect as minimizing labor input may not lead to the lowest possible cost. Option D and E are incorrect as they suggest maximizing marginal product, which is not directly related to minimizing costs.

In the Long Run,a Profit- Maximizing Firm Producing a Given