Which of the following statements is (are) TRUE, assuming the firm is choosing t

Question

Which of the following statements is (are) TRUE, assuming the firm is choosing the optimal bundle of inputs that minimizes the cost of producing a given quantity of output?

I. The marginal product per dollar spent on labor equals the marginal product per dollar spent on capital.

II. APL = APK

IV. MPL × W = MPK × R

Answer Options:

A.I and III

B.I, II, III, and IV

C.IV

D.I and II

Which of the following statements is (are) TRUE, assuming the firm is choosing the optimal bundle of inputs that minimizes the cost of producing a given quantity of output?

I. The marginal product per dollar spent on labor equals the marginal product per dollar spent on capital.

III.

II. APL = APK

IV. MPL × W = MPK × R

Explanation / Answer

D is correct

MPL/MPK= W/R

This can be written as MPL/W= MPK/R

which is same as equation given in II.

Also this is nothing but marginal product per dollar dollar spent on labor is equal to marginal product per dollar spent on capital.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.