A Firm Can Minimize Cost by

question 4

Multiple Choice

A firm can minimize cost by

• A) picking the bundle of inputs where the lowest isocost line touches the isoquant.
• B) picking the bundle of inputs where the isoquant is tangent to the isocost line.
• C) picking the bundle of inputs where the last dollar spent on one input gives as much extra output as the last dollar spent on any other input.
• D) All of the above.

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Definitions:

Boots

Footwear that covers not only the feet but also the ankles and sometimes extends up to the knees or higher, designed for protection, style, or both.

Pairs

Pairs are sets of two items or entities considered together, often because they are related or function together.

Cost Curve

A graphical representation showing how the cost of producing a good varies with the level of output.

Diminishing Returns

Diminishing returns is an economic principle stating that after a certain point, additional units of input result in progressively smaller increases in output.