True or false? why?

1. To minimize the cost of producing a given level of output, the combination of inputs the firm must choose is such that the marginal products of the inputs are all identical.

2. The best person to hire for a job is the person who can perform the job best!

3. The economic "problem" created by an increase in demand is ordinarily "solved"

through a combination of (i) producers supplying more output to the market place,

(ii) current consumers cutting back on consumption, and (iii) new demanders settling for less output than they desire at the going market price.

4. In the dairy industry, if the law of diminishing marginal product does NOT hold, then I could supply the entire world with milk from a single cow.

5. Consider a short-run production function (with capital fixed) that gives rise to di-

minishing marginal product of labor throughout (beginning with the first labor hour

hired). In this case, the mathematical optimization problem will give a single solution- albeit one that minimizes rather maximizes profit.