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One economic question is deciding how to produce. That means businesses need to make decisions on...

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Economics

One economic question is deciding how to produce. That meansbusinesses need to make decisions on what types of productionsystems and what types of inputs to use. The isoquant/isocost modelallows us to conceptualize the answer(s) a business might have forthe question of how to produce. The relative price inputs plays arole in answering the question of how to produce.

There may appear to be times when a firm does not appear toadjust input use to changes in relative prices of inputs. Explainwhy this might be the case.

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4.0 Ratings (622 Votes)
Pricing decisions taken by the firms usually involve analysis regarding marginal contributions to revenues and costs The firms achieve their aim of profit maximization by increasing their production until marginal revenue is    See Answer
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