If a firm is employing a combination of inputs that is on its expansion path, then it must be maximizing profits.

Question

Quizplus · Accepted Answer

Being on the expansion path means the firm is using inputs in the cost-minimizing combination for a given level of output, but this does not necessarily mean it is maximizing profits. Profit maximization also depends on the firm's revenue and the prices of outputs, not just on the cost-minimization of inputs.

If a Firm Is Employing a Combination of Inputs That