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) MPL = MPK = MPA
B) PL = PK = PA
C) MPL/PL = MPK/PK = MPA/PA
D) MPL = MPK = MPA = 1/PX