For a Firm with Only Two Inputs, Capital and Labour

question 107

Multiple Choice

For a firm with only two inputs, capital and labour, the condition MPK/MPL = PK/PL guarantees that the firm is

• A) minimizing its costs but is not necessarily maximizing its profits.
• B) technically efficient but not economically efficient.
• C) economically efficient but not technically efficient.
• D) at its profit- maximizing output but is not necessarily minimizing its costs.
• E) at its profit- maximizing and cost- minimizing level of output.