In order to divide a given production quota between two production processes in such a way as to produce the quota at the lowest possible cost, one should produce the output where

Question

Quizplus · Accepted Answer

When dividing a production quota between two production processes, one should produce more in the process with lower marginal cost because it takes less cost to produce an additional unit. Therefore, in order to produce the quota at the lowest possible cost, both processes should have equal marginal costs. Therefore, the correct answer is C where marginal costs are equal in both processes.

In Order to Divide a Given Production Quota Between Two