A Tangency Between an Isocost Line and an Isoquant Shows

question 18

Multiple Choice

A tangency between an isocost line and an isoquant shows all the following,except:

• A)the maximum output attainable by a firm at a given cost.
• B)the minimum cost necessary to produce a given output.
• C)an input combination where the ratio of marginal products equals the ratio of the input prices.
• D)an input combination where the returns to labor and capital inputs are equal.

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Definitions:

Wage Flexibility

The ease with which wages can adjust to match the supply and demand for labor, helping in the correction of labor market imbalances.

Full Employment

A situation in which all available labor resources are being used in the most economically efficient way, typically marked by the absence of cyclical unemployment.

John Maynard Keynes

A British economist whose theories on the causes of prolonged unemployment and the role of government intervention in economies formed the basis of Keynesian economics.

Full Employment

A condition in the economy where all potential labor forces are utilized in the most economically effective manner.