Firms are motivated to minimize production costs because
A) it is the most environmentally friendly way to produce goods.
B) least-cost production techniques use the smallest total quantity of resources.
C) competitive pressures in the market will drive out higher-cost producers.
D) the government provides tax credits and subsidies to low-cost producers.

Question

Quizplus · Accepted Answer

Competitive pressures in the market will drive out higher-cost producers, making it necessary for firms to minimize production costs to stay competitive and profitable. Option A is not necessarily true, as minimizing production costs may not always be the most environmentally friendly way to produce goods. Option B is also not necessarily true, as minimizing production costs may involve using cheaper and more abundant resources, but not necessarily the smallest total quantity of resources. Option D is not true as well, as there is no guarantee that the government provides tax credits and subsidies to low-cost producers.

Firms Are Motivated to Minimize Production Costs Because