The Point of Tangency Between an Isocost Line and an Isoquant

question 56

Multiple Choice

The point of tangency between an isocost line and an isoquant is necessarily

• A) the profit-maximizing combination of inputs that should be hired to produce that output level.
• B) the least costly combination of inputs that can be hired to produce the output level.
• C) both the profit-maximizing and least costly combination of inputs that can be used to produce the output level.
• D) the minimum amount of output that can be attained for that level of expenditure.

---

Definitions:

Trade-In Allowance

The amount a seller credits to a buyer when the buyer returns a previously purchased item as part of the payment for a new item.

Patents

Legal documents granting an inventor exclusive rights to produce, use, and sell an invention for a certain period of time.

Amortized

Gradual reduction of a debt over a period of time through regular payments, which may include portions of both principal and interest.

Fully Depreciated

The status of an asset after its cost has been completely allocated over its useful life, leaving it with no book value.