A firm is operating with an optimal combination of inputs. Suddenly the price of one input rises. The firm should

A. buy less of that input and more of the other input.
B. change its input mix so that the marginal physical product of the input whose price has risen falls and the marginal physical product of the other input rises.
C. buy less of whichever input now has the highest money price and more of the other input.
D. reduce its output.


Answer: A

Economics

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