The cost-minimizing rule is that a firm should utilize inputs such that the marginal product of an input divided by the price of the input is the same for all inputs. This is also the profit-maximizing rule because
A. they are exactly the same.
B. we obtain the profit-maximizing rule by multiplying each ratio by the product price, which is the same for each input.
C. we obtain the profit-maximizing rule by multiplying each ratio by the marginal revenue produced.
D. the profit-maximizing rule is just the inverse of the cost-minimizing rule.
Answer: A
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The demands for labor and other input factors are called
A) derived demands, because the demand for these inputs depends on the demand for goods and services they are employed to produce. B) developed demands, because the demand for these inputs is developed from an analysis of the costs of advertising products. C) indirect demands, because the demand for these inputs is indirectly related to the costs of advertising products. D) reverse demands, because the demand for these inputs varies inversely with the demand for goods and services they are employed to produce.
The quantity supplied of a good is the amount that a. buyers are willing and able to purchase
b. sellers are able to produce. c. buyers and sellers agree will be brought to market. d. sellers are willing and able to sell.
The natural rate of unemployment is a measure of
a) human capital b) long run equilibrium in the labor market c) the rate at which natural resources are extracted and depleted d) the size of the private sector relative to the public sector e) the rate at which marginal returns to labor are diminishing according to the economy’s long run production function
Economic freedom is
A. important in leading to positive economic growth. B. a concept in theory since no country has pure economic freedom and therefore cannot be analyzed with respect to economic growth. C. a confusing concept since the more economic freedom residents in a country have the lower the level of economic growth. D. not an important factor in leading to positive economic growth.