Answer to Question #88209 in Microeconomics for Hassan Muqarab

Question

If a firm uses only capital and labour, show why the cost minimising the combination of inputs sets:

Answer 1

If a firm uses only capital and labour, then the cost minimising the combination of inputs sets is:

MPL/PL = MPK/PK, where MPL and MPK are marginal products of labour and capital, PL and PK are prices of labour and capital.