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46.Firms always would like to operate on:  A. Least cost combination  B. Maximum cost combination  C. Firms output maximisation  D. Employee maximisation

Question

46. Firms always would like to operate on:

  • A. Least cost combination
  • B. Maximum cost combination
  • C. Firms output maximisation
  • D. Employee maximisation
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Solution

The correct answer is A. Least cost combination.

Here's why:

Firms always aim to maximize their profits. One way to do this is by minimizing costs. Therefore, they would like to operate on the least cost combination. This means they aim to use the combination of inputs (like labor and capital) that costs the least, while still allowing them to produce the desired level of output.

Option B, the maximum cost combination, is not desirable because it would reduce profits.

Option C, firms output maximisation, might seem like a good choice, but it's not necessarily the case that producing more will lead to higher profits. It depends on the cost of producing additional units and the price at which they can be sold.

Option D, employee maximisation, is not typically a goal of firms. While firms need employees to produce goods or services, simply having more employees does not necessarily lead to higher profits. It could lead to higher costs if those employees are not needed.

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