The equation MP ₗ / Pₗ = MP C / P_c A)designates the MR = MC level of output. B)assumes imperfect competition in the hiring of labor and capital. C)is a sufficient condition for the maximization of profits. D)is a necessary, but not sufficient, condition for the maximization of profits.

Question

Quizplus · Accepted Answer

This equation represents the condition for cost minimization, where the marginal product per dollar spent on labor equals the marginal product per dollar spent on capital. It is necessary for profit maximization but not sufficient, as it does not account for the revenue side of profit maximization.

The Equation MP ₗ / Pₗ = MP C