Consider the following statements when answering this question. I. With convex isoquants, a firm's expansion path cannot be negatively sloped.
II) If a firm uses only two factors of production, one of whose marginal product becomes negative when its use exceeds a certain level, then a cost-minimizing firm's expansion path will have vertical or horizontal segments.
A) I is true, and II is false.
B) I is false, and II is true.
C) Both I and II are true.
D) Both I and II are false.

Question

Quizplus · Accepted Answer

Convex isoquants imply that as a firm expands, it will use more of both inputs, preventing a negatively sloped expansion path. If one input's marginal product becomes negative, the firm will not use more of it beyond that point, leading to vertical or horizontal segments in the expansion path.

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