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) MP_D = MP_F. C) MP_D/P_D = MP_F/P_F. D) MP_D/P_F = MP_F/P_D.

Question

Quizplus · Accepted Answer

The correct answer is that the firm will minimize the cost of producing any level of output by employing resources D and F in such amounts that the marginal product per dollar spent on each input is equal, which is represented by the formula: MPD/PD = MPF/PF. This ensures that the last dollar spent on each input yields the same amount of additional output, optimizing resource allocation.

If a Firm Is Hiring Variable Resources D and F