72: Cost Minimizing Input Combo Flashcards
1
Q
when are capital and labor substitutes?
A
when using one eliminates the need for the other
2
Q
when are capital and labor complements?
A
when more of one increases the marginal productivity of the other
3
Q
cost of capital
A
rental rate
4
Q
cost of labor
A
wage
5
Q
cost minimizing input combo rule
A
MPL/wage = MPC/rental rate
