In the long run,a profit-maximizing firm produces any given level of output by choosing the production method that
A)maximizes the marginal product of all factors.
B)equates the marginal product of all factors.
C)equates the average cost per unit of all factors.
D)is associated with a flat total cost curve.
E)produces that output at the lowest possible cost.

Question

Quizplus · Accepted Answer

A profit-maximizing firm produces any given level of output at the lowest possible cost. This is because, in the long run, the firm can adjust its factor inputs and choose the production method that minimizes the cost of producing that output level. By doing so, the firm can maximize its profits. Therefore, option E is the best choice.

In the Long Run,a Profit-Maximizing Firm Produces Any Given Level