Question

How should a firm use its resources in order to

produce a given amount of output at the lowest
possible cost?
(A) It should use more of the cheaper resource.
(B) It should use more of the resource with the
highest marginal product.
(C) It should use each resource until it reaches the
point of diminishing marginal returns.
(D) It should use each resource until the marginal
products of each resource are equal.
(E) It should use each resource until the marginal
products per dollar spent on each resource are
equal

Answer 1

Answer: It should use more of the resource with the highest marginal product

Explanation: B. as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease.