Question

At the cost-minimizing combination of factors: Select one: a. the MPP of all factors will be equal b. the MFC of all factors will be equal c. the MRP of all factors will be equal d. the ratio of MPP to factor price will be the same for all factors

Answer 1

D) the ratio of MPP to factor price will be the same for all factors

Step-by-step explanation:

The ratio of marginal physical product (MPP) is calculated by dividing the change in total physical output by change in variable input.

In order to minimize costs, producers must combine factors so that the ratio of MPP to factor price will be the same for all factors. This way the amount of physical product produced with require the constant additions of factors of production, in other words, the marginal cost remains constant.