Question

    In choosing between the two completing resources, the saving in the resource replaced must be greater than the cost of resource added. Which of the following law states that:

    A Least cost combination Correct Answer Incorrect Answer
    B Law of diminishing returns Correct Answer Incorrect Answer
    C Law of equi-marginal utility Correct Answer Incorrect Answer
    D Law of supply and demand Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    The principle of least cost combination states that if two factor inputs are considered for a given output the least cost combination will be such where their inverse price ratio is equal to their marginal rate of substitution.

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