Which of the following is the correct statement of the marginal rule for optimal input proportions? The input proportion is optimal when
A)PA = PB.
B)MPPA = MPPB.
C)PA × MPPA = PB × MPPB.
D)PA/PB = MPPA/MPPB.

Question

Quizplus · Accepted Answer

The marginal rule for optimal input proportions states that the ratio of the prices of inputs (PA/PB) should equal the ratio of their marginal physical products (MPPA/MPPB). This ensures that the cost of the last unit of output produced from each input is the same, optimizing the input proportions.

Which of the Following Is the Correct Statement of the Marginal