The profit-maximizing and the least-cost combination of inputs are
A) the result of unrelated decisions.
B) always identical.
C) such that minimizing costs always results in profit maximization.
D) such that maximizing profits always entails the least-cost combination of inputs.

Question

Quizplus · Accepted Answer

Maximizing profits involves finding the level of output where marginal revenue equals marginal cost. To maximize profits, a firm must produce at the output level where marginal revenue equals marginal cost and then choose the least-cost combination of inputs to produce that level of output. Therefore, maximizing profits always entails the least-cost combination of inputs. Thus option D is the correct answer.

The Profit-Maximizing and the Least-Cost Combination of Inputs Are