Question

The total cost of producing a given level of output is:____.

a. minimized when marginal product multiplied by input price is equal for all inputs.
b. minimized when the marginal products of all inputs are equal.
c. maximized when a corner solution exists.
d. minimized when the ratio of marginal product to input price is equal for all inputs.

Answer 1

The total cost of producing a given level of output is:____.

d. minimized when the ratio of marginal product to input price is equal for all inputs.

Step-by-step explanation:

With the above situation, the marginal cost (input price) = the marginal revenue (marginal product). The producer can then maximize profit if it can lower its average total cost per unit below the marginal cost for producing one additional unit of its product. In all cost situations, it is better for the producer to have the total revenue exceeding the total costs, at all times, but more especially with increasing production.