The Least Costly Way to Produce a Given Level of Output

question 129

True/False

The least costly way to produce a given level of output is indicated by the point of tangency between a budget line and the production indifference curve corresponding to that level of output.

---

Definitions:

Variable Costs

Expenses that change in proportion to the level of production or sales volume, such as raw materials or direct labor costs.

Profit

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes involved in sustaining the activities.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and insurance.

Unit Variable Cost

The cost associated with producing one additional unit of a product, which includes labor, materials, and other variable expenses.