Asked by
Charles Lantz
on Dec 19, 2024
Verified
If MP ₐ / Pₐ = MP b / Pᵦ and MRP a / Pₐ = MRP b / Pᵦ > 1, this firm is
A) producing its output with the least costly combination of resources but is not producing the profit-maximizing output.
B) maximizing profits but failing to minimize costs.
C) neither maximizing profits nor minimizing costs.
D) combining resources a and b so as to minimize costs and maximize profits.
Least Costly Combination
An economic principle that firms use to minimize costs while combining different factors of production to produce a given output.
Maximizing Profits
The goal of businesses to make the highest possible profit, often by increasing revenue, reducing costs, or both.
MP
No standard definition available; it could refer to "Marginal Product" in economics, which is the extra output generated by adding one more unit of input.
- Understand the significance of resources' marginal productivity in deciding how resources are allocated and the expenses of production.
- Comprehend the link between economic gain and the strategies of minimizing costs and maximizing profits in the allocation of resources.
Verified Answer
RR
Learning Objectives
- Understand the significance of resources' marginal productivity in deciding how resources are allocated and the expenses of production.
- Comprehend the link between economic gain and the strategies of minimizing costs and maximizing profits in the allocation of resources.