If a firm is hiring variable resources D and F in perfectly competitive input markets, it will minimize the cost of producing any level of output by employing D and F in such amounts that A)the price of each input equals its MP. B)MP D = MP F. C)MP_d / P_d = MP F / PF . D)MP_d / PF = MPF / P_d.

Question

Quizplus · Accepted Answer

A firm minimizes the cost of producing any level of output by employing inputs in such amounts that the ratio of the marginal product (MP) of each input to its price (P) is equal across all inputs. This is represented by MPD/PD = MPF/PF, which is correctly expressed in choice C using a different notation.

If a Firm Is Hiring Variable Resources D and F