If a firm used only two factors of production, labor (L) and capital (K), which of the following conditions would be present if the firm was minimizing its cost of production? A) MP_L ÷ P_L = MP_K ÷ P_K B) MP_L × P_L = MP_K × P_K C) MRP_L = MRP_K D) MP_L = MP_K

Question

Quizplus · Accepted Answer

The condition for minimizing the cost of production is that the marginal product per dollar spent on each factor of production must be equal. In this case, the marginal product of labor divided by the price of labor must be equal to the marginal product of capital divided by the price of capital.

If a Firm Used Only Two Factors of Production, Labor