If a firm is minimizing the cost of producing its chosen level of output, the marginal product of the last dollar spent on each input should be equal.

Question

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When a firm is minimizing the cost of producing its chosen level of output, it should allocate its spending so that the marginal product of the last dollar spent on each input should be equal. This is based on the principle of diminishing marginal returns, which states that as a firm adds more units of a variable input (such as labor or capital), the marginal product of each additional unit will eventually decrease. Therefore, to minimize costs, a firm should allocate its spending across inputs so that the last dollar spent on each input provides the same marginal product.

If a Firm Is Minimizing the Cost of Producing Its