If a firm is hiring variable resources D and F in perfectly competitive input markets, it will minimize the cost of producing any level of output by employing D and F in such amounts that
A) the price of each input equals its MP.
B) $\mathrm { MP } _ { D } = \mathrm { MP } _ { F }$
C) $\mathrm{MP} _ { D } / P _ { D } =\mathrm{MP} _ { F } / P _ { F }$
D) $\mathrm { MP } _ { D } / P _ { F } = \mathrm { MP }_ { F } / P _ { D } $

Question

Quizplus · Accepted Answer

In a perfectly competitive input market, firms should hire variable resources in such amounts that the marginal product per dollar spent on each input is equal. Therefore, the optimal employment of inputs D and F will occur when the ratio of the marginal product to the price of each input is equal, i.e. $\mathrm{MP} _ { D } / P _ { D } =\mathrm{MP} _ { F } / P _ { F }$. This ensures a minimum cost for producing any given level of output. Therefore, the correct choice is C.

If a Firm Is Hiring Variable Resources D and F MPD=MPF\mathrm { MP } _ { D } = \mathrm { MP } _ { F }MPD​=MPF​

If a Firm Is Hiring Variable Resources D and F $\mathrm { MP } _ { D } = \mathrm { MP } _ { F }$