If a firm is hiring inputs under purely competitive conditions, then any level of output will be produced with the least-cost combination of resources A and B when
A)MU of A/price of A = MU of b/price of B.
B)MRP of A = MRP of B.
C)the price of A equals the price of B.
D)MP of A/price of A = MP of b/price of B.

Question

Quizplus · Accepted Answer

The least-cost combination of resources A and B is achieved when the marginal product per dollar spent on each resource is equalized across all resources, which is represented by MP of A/price of A = MP of B/price of B. This ensures that the firm is allocating its budget in a way that maximizes the total output derived from its inputs.

If a Firm Is Hiring Inputs Under Purely Competitive Conditions