If MPP _a \P _a = MPP _b \P _b , then the firm should increase the usage of both input a and input b.

Name: If MPP a \P a = MPP b \P b , then the firm should increase the usage of both input a and input b.
Brand: Quizplus
Rating: 4.7 (28 reviews)

Question

Quizplus · Accepted Answer

The firm should not increase the usage of both inputs if the marginal product per price is equal for both inputs, as it indicates that the firm is already optimizing the allocation of resources between inputs a and b.