For a firm with only two inputs,capital and labour,the condition MP_K/MP_L = P_K/P_Lguarantees that the firm is A)at its profit-maximizing output but is not necessarily minimizing its costs. B)minimizing its costs but is not necessarily maximizing its profits. C)technically efficient but not economically efficient. D)economically efficient but not technically efficient. E)at its profit-maximizing and cost-minimizing level of output.

Question

Quizplus · Accepted Answer

The condition MPK/MPL = PK/PL is the condition for cost minimization, indicating that the firm is using the optimal combination of inputs to minimize costs, but it does not necessarily mean the firm is maximizing profits.

For a Firm with Only Two Inputs,capital and Labour,the Condition