The Following Graph Shows One of a Firm's Isocost Curves

question 86

Short Answer

The following graph shows one of a firm's isocost curves and isoquants.

a. Combination A is not an economically efficient method of producing 4,000 units of output because, at A, _________ exceeds _________ or, in other words, _________ exceeds _________. The firm should increase ___________ and decrease ___________.
b. Combination B is not an economically efficient method of producing 4,000 units of output because, at B, _________ exceeds _________, or, in other words, _________ exceeds _________. The firm should increase ___________ and decrease ___________.
c. At the economically efficient method of producing 4,000 units of output the MRTS will equal _________.

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Definitions:

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries made at the end of the previous accounting period, simplifying record-keeping.

Profit Margin

A financial ratio calculated as net income divided by revenue, expressing the percentage of each dollar of revenue that remains as profit.

Net Income

The profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Net Sales

The revenue from goods or services sold by a company after deducting returns, allowances for damaged or missing goods, and discounts.