For a firm with only two inputs,capital and labour,the condition MPK/MPL = PK/PL guarantees that the firm is
A)at its profit- maximizing and cost- minimizing level of output.
B)minimizing its costs but is not necessarily maximizing its profits.
C)economically efficient but not technically efficient.
D)technically efficient but not economically efficient.
E)at its profit- maximizing output but is not necessarily minimizing its costs.

Question

Quizplus · Accepted Answer

The condition MPK/MPL = PK/PL is the rule for cost minimization, ensuring that the firm is using the optimal combination of inputs to minimize costs, but it does not necessarily mean the firm is maximizing profits.

For a Firm with Only Two Inputs,capital and Labour,the Condition