In a perfectly competitive labor market, the least-cost combination rule for resource use

Question

Quizplus · Accepted Answer

In a perfectly competitive labor market, firms seek to minimize their costs of production. The least-cost combination rule states that the firm should hire each input or resource such that the marginal physical product per dollar spent on each resource is equalized. This is because the firm wants to produce goods at the lowest possible cost, and equalizing the marginal physical product per dollar spent ensures that the firm is not overspending on any one input. Therefore, choice B is the correct answer.

In a Perfectly Competitive Labor Market, the Least-Cost Combination Rule