A firm's optimal input proportions may change if
A)input prices change.
B)the relative marginal productivities of the inputs change.
C)the firm's optimal output level changes.
D)All of the responses are correct.

Question

Quizplus · Accepted Answer

All of the options can alter a firm's optimal input proportions. If input prices change, the firm may need to adjust its input mix to minimize costs. If the relative marginal productivities of the inputs change, the firm may need to change its input mix to maximize output. Finally, if the firm's optimal output level changes, it may need to alter its input proportions to become more efficient.

A Firm's Optimal Input Proportions May Change If