The Cost-Minimizing Rule Is That a Firm Should Utilize Inputs

question 236

Multiple Choice

The cost-minimizing rule is that a firm should utilize inputs such that the marginal physical 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) we obtain the profit-maximizing rule by multiplying each ratio by the marginal revenue produced.
• B) we obtain the profit-maximizing rule by multiplying each ratio by the product price, which is the same for each input.
• C) the profit-maximizing rule is just the inverse of the cost-minimizing rule.
• D) they are exactly the same.

---

Definitions:

Animal Fat

A type of fat derived from animals, used in cooking and in the production of a variety of consumer goods.

Bases

Substances that can accept protons or donate a pair of valence electrons to form a bond and are characterized by a high pH, often above 7 when dissolved in water.

Transition Metals

Elements found in the central block of the periodic table (groups 3-12), characterized by their ability to form positive ions with incomplete d-shells.

Alkali Metals

A group of chemical elements in the periodic table with similar properties: shiny, soft, highly reactive at standard temperature and pressure.