All decisions of input purchases and output production are determined by:

Question

Quizplus · Accepted Answer

Relative prices play a crucial role in determining the decisions of input purchases and output production because they help businesses determine the most efficient way to allocate their resources in order to maximize profits. When a certain input becomes relatively more expensive compared to other inputs, businesses may choose to reduce its use and increase the use of other, relatively cheaper inputs to produce the same output. This helps businesses minimize their production costs and increase their profits.

All Decisions of Input Purchases and Output Production Are Determined