Which of the following conditions indicate cost minimization,assuming two inputs,labour ( L)and capital (K)?
A)PK ∙ MPK = PL ∙ MPL
B)MPL = MPK
C)MPK/PK = MPL/PL
D)MPK/PL = MPL/PK
E)PK = PL

Question

Quizplus · Accepted Answer

C)MPK/PK = MPL/PL is the correct condition for cost minimization. This condition states that the marginal product of capital per unit cost (MPK/PK) should equal the marginal product of labor per unit cost (MPL/PL), ensuring that the firm is allocating resources between capital and labor in the most efficient way to minimize costs.

Which of the Following Conditions Indicate Cost Minimization,assuming Two Inputs,labour