The rule of cost minimization indicates that a firm should:
A)employ inputs so as to maximize output.
B)employ inputs such that the marginal product per dollar spent is equal for all inputs.
C)minimize total costs.
D)minimize marginal costs.

Question

Quizplus · Accepted Answer

The rule of cost minimization states that a firm should allocate its spending on inputs in such a way that the marginal product per dollar spent is the same for all inputs. This ensures that the firm is using its resources in the most efficient way possible to minimize costs while producing a given level of output.

The Rule of Cost Minimization Indicates That a Firm Should