Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?
A) The marginal product per dollar spent on all inputs is equal.
B) The MRTS is equal to the ratio of the quantity of inputs.
C) The marginal products of all inputs are equal.
D) The marginal product per dollar spent on all inputs is equal and the MRTS is equal to the ratio of the quantity of inputs.

Question

Quizplus · Accepted Answer

When a producer minimizes the cost of producing a given level of output, the condition that the marginal product per dollar spent on all inputs is equal must be met. This ensures that the last dollar spent on any input provides the same additional amount of output, optimizing resource allocation.

Which of the Following Conditions Is True When a Producer