The least-cost rule
When a firm is producing a specific output with the least-cost combination of resources, where each resource yields the same marginal product.
Marginal product Marginal product
of labor (MPL) = of capital (MPc)
Price of Labor (PL ) Price of Capital (Pc )
The profit-maximizing rule
A firm will achieve its profit-maximizing combination of resources when each resource is employed to the point at which its marginal revenue product equals its resource price.
