If isoquants are smooth and convex, then a necessary condition for cost minimization is that the:
A)cost minimizing bundle intersects the isoquant.
B)MP per dollar of an input equals the MP per dollar of all others.
C)MRTS equals the slope of the isoquant.
D)price of the final good is equal to the MC of production.

Question

Quizplus · Accepted Answer

The necessary condition for cost minimization when isoquants are smooth and convex is that the marginal product (MP) per dollar of an input equals the MP per dollar of all other inputs. This ensures that the firm is allocating its resources in the most efficient way possible, getting the maximum output for its expenditure on inputs.

If Isoquants Are Smooth and Convex, Then a Necessary Condition