Starting from a Point of Tangency Between an Isoquant and an Isocost

question 20

Multiple Choice

Starting from a point of tangency between an isoquant and an isocost line, a movement along the isoquant will

• A) increase output but have no effect on cost
• B) decrease output but have no effect on cost
• C) increase both output and cost
• D) have no effect on output but increase cost
• E) have no effect on output but decrease cost

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Definitions:

Economic Profits

The surplus remaining after subtracting total costs from total revenues, including both explicit and implicit costs.

Creative Destruction

A concept in economics that refers to the process by which new innovations lead to the demise of old technologies and economic structures, driving economic growth through renewal.

Joseph Schumpeter

Joseph Schumpeter was a 20th-century economist known for his theories on business cycles, innovation, and the concept of "creative destruction."

Alfred Marshall

A prominent British economist known for his significant contributions to the principles of microeconomics.