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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Compare the firm’s least-cost rule with how buyers allocate their consumption dollars.

To determine

Relationship between low-cost rule and allocation of consumption dollars.

Explanation

A firm purchases the factors of production, such as labor and capital, when the ratios of marginal product (MP) to the price of factor for both factors are equal, which is known as low-cost rule. It can be represented as follows:

MPLPL=MPKPK

A consumer always chooses the combination of g

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