Which of the following statements is correct?
A)Evidence strongly suggests that legislatively mandated input combinations have greatly reduced production costs in many industries.
B)Legislating input combinations in a particular industry can bias the decision making of the firm's managers and lead to higher-than-necessary costs of production.
C)Legislating input combinations in a particular industry has little or no effect on the decision making of the firm's managers.
D)Legislating input combinations in a particular industry is preferred to relying on market forces to determine the cost-minimizing combination of inputs to a production process.

Question

Quizplus · Accepted Answer

Legislatively mandated input combinations can limit a firm's flexibility in choosing the most efficient input combinations for their production processes, potentially leading to higher costs of production. Therefore, option B is the most correct statement. Option D is incorrect because reliance on market forces is generally considered more efficient in determining the cost-minimizing combination of inputs. Options A and C are also incorrect as there is no consistent evidence to suggest that legislative input combinations have either greatly reduced or had no effect on production costs across industries.

Which of the Following Statements Is Correct