Asked by Autumn Gilbert on Jun 14, 2024
Verified
Assume the Backwoods Shoe Company hires three inputs: labor (L) , capital (K) , and land (A) to produce shoes (X) . Which of the following conditions must be met so that the firm is using the optimal, or least costly, combination of inputs?
A) MPL = MPK = MPA
B) PL = PK = PA
C) MPL/PL = MPK/PK = MPA/PA
D) MPL = MPK = MPA = 1/PX
Optimal Combination
The best mix of different factors or elements (such as resources or inputs) to achieve a desired outcome or objective.
Inputs
The resources used in the production process, including labor, raw materials, and capital.
Least Costly
Refers to the option that requires the smallest amount of expense or effort to achieve a given outcome.
- Understand the optimal combination of inputs for production efficiency.
Verified Answer
PW
phillisia whittakerJun 17, 2024
Final Answer :
C
Explanation :
The correct condition for the optimal combination of inputs in production is when the marginal product of an input divided by its price is equal for all inputs. This ensures that the last dollar spent on each input yields the same amount of additional output, achieving cost minimization.
Learning Objectives
- Understand the optimal combination of inputs for production efficiency.