The Combination of Two Inputs That Results in a Given

question 2

Multiple Choice

The combination of two inputs that results in a given quantity of output at least cost occurs where

• A)an isocost line is tangent to the relevant isoquant.
• B)average total cost is at its minimum.
• C)long-run average total cost is at its minimum.
• D)an isoquant reaches its minimum.
• E)an isoquant is at its steepest.

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Definitions:

Short-run Economic Profits

Profits earned by a firm in the short run, where not all inputs can be varied and some fixed costs are still incurred.

Competitive Industries

Sectors of the economy where businesses actively compete with each other to offer goods or services to consumers, often characterized by low barriers to entry and a high level of innovation.

Allocative Efficiency

A state of resource allocation where goods and services are distributed according to consumer preferences, maximizing overall societal welfare.

Productive Efficiency

A situation where a firm or economy produces output at the lowest possible cost, using all its resources efficiently.