A firm that maximizes output for a specific total cost is producing at the point where the isocost line is above the highest isoquant.

Question

Quizplus · Accepted Answer

A firm that maximizes output for a specific total cost is producing at the point where the isocost line is tangent to the highest possible isoquant, not above it. This tangency point indicates the most efficient combination of inputs for the given cost.

A Firm That Maximizes Output for a Specific Total Cost