Assume the Backwoods Shoe Company Hires Three Inputs: Labor (L)

Multiple Choice

Assume the Backwoods Shoe Company hires three inputs: labor (L) , capital (K) , and land (A) to produce shoes (X) . Which of the following conditions must be met so that the firm is using the optimal, or least costly, combination of inputs?

A) MP_L = MP_K = MP_A
B) P_L = P_K = P_A
C) MP_L/P_L = MP_K/P_K = MP_A/P_A
D) MP_L = MP_K = MP_A = 1/P_X