The cost minimizing equilibrium condition can be written as
A) MPL = MPK.
B) PL = PK.
C) (MPL)(PL) = (MPK)(PK).
D) MPL/PL = MPK/PK.

Question

Quizplus · Accepted Answer

The cost minimizing condition can be stated as the ratio of the marginal product of labor to the wage rate equals the marginal product of capital to the rental rate of capital. This can be written as MPL/PL = MPK/PK. Therefore, option D is the correct choice.

The Cost Minimizing Equilibrium Condition Can Be Written as