An Isocost Line Shows

question 145

Multiple Choice

An isocost line shows

• A)all the possible combinations of two inputs that a firm can use to produce its output.
• B)all the possible combinations of two inputs a firm can use that have the same total cost.
• C)all the possible combinations of two inputs a firm can use that have the same marginal cost.
• D)all the possible combinations of two inputs with constant returns to scale.

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Definitions:

Disposable Income

The financial pot allocated for households to manage their savings and expenditures after income tax deductions.

Autonomous Consumption

The level of consumption spending that occurs when income is zero, representing the expenditures that consumers must make even when they have no income.

Disposable Income

Households' budget for spending and savings after the necessary income taxes have been deducted.

Induced Consumption

Consumer spending that increases as disposable income rises, and decreases as income falls.