Question: The optimum product combination at a given level of resources will be where:
Options:
∆y1/∆y2= Py1/Py2
∆y2 /∆y1= Py1/Py2
∆x1/ ∆2= Px 1/ Px2
∆x2/ ∆x1= Px1/ Px2
✅ Explanation: The optimum product combination is achieved when the marginal rate of product substitution (MRPS) equals the price ratio of the two products. MRPS is the rate at which a firm can substitute one output for another while keeping the total resource cost constant. In this case(b) ∆y2 /∆y1= Py1/Py2 represents the MRPS, and Py1/Py2 represents the price ratio.