A basic model of a business firm in economics assumes that its management cannot improve on the technology that transforms inputs like labor and energy into output.This assumption helps them to understand the choice of:
A)input levels that minimize cost.
B)output levels that minimize cost.
C)output levels that maximize profits.
D)input levels that maximize profits.

Question

Quizplus · Accepted Answer

If the management cannot improve on the technology that transforms inputs into output, then the only way to improve profits is to use the inputs in the most efficient way possible, which means minimizing cost. Therefore, the best choice is to determine input levels that minimize cost.

A Basic Model of a Business Firm in Economics Assumes