A firm that maximizes output for a given total cost must be producing where the isocost line is
A) above the highest isoquant
B) tangent to the highest isoquant
C) intersected by the lowest isoquant
D) intersected by two isocost lines
E) perfectly horizontal

Question

Quizplus · Accepted Answer

In order to maximize output for a given total cost, the firm must produce at the point where the highest isoquant is tangent to the isocost line. At this point, the firm is using the optimal combination of inputs to produce the maximum output for the given cost.

A Firm That Maximizes Output for a Given Total Cost