Production theory is like consumer theory in that in the former the consumer equates the marginal utilities from each good, while in the latter the firm equates the marginal products from each factor.

Question

Quizplus · Accepted Answer

Production theory is not like consumer theory in the way described in the statement. In production theory, the firm seeks to maximize profits by equating marginal revenue with marginal cost, not marginal product from each factor. In consumer theory, the consumer equates the marginal utility per dollar of each good, not the marginal utility from each good.

Production Theory Is Like Consumer Theory in That in the Former