A Firm Achieves Least Cost in Production by Substituting Factors

question 51

Multiple Choice

A firm achieves least cost in production by substituting factors until:

• A)their factor prices are equal.
• B)their marginal products are each equal to their factor prices.
• C)their marginal products are each zero.
• D)the ratio of their marginal products equals the ratio of their factor prices.
• E)their marginal products are equal.

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Definitions:

Nitrification

A microbial process by which ammonia is converted into nitrate, an important step in the nitrogen cycle.

Ammonium

A positively charged ion (NH4+) formed by the addition of a hydrogen ion to ammonia (NH3).

Nitrates

Salts or esters of nitric acid, containing the NO3- ion, commonly used in fertilizers.

Nitrogenous Compounds

Organic or inorganic compounds containing nitrogen in various chemical forms, important in many biological processes and industrial applications.