The figure below shows the isocost lines and the isoquant map for a firm producing golf tees.
FIGURE 8- 6
-Refer to Figure 8- 6.Suppose this firm is producing 3000 golf tees and is at point F on the isoquant map.In order to maintain its output and minimize costs this firm should
A)move to an isoquant closer to the origin.
B)not change its use of factors.
C)employ more labour and less capital.
D)employ more capital and less labour.
E)move to an isocost line further from the origin.

Question

The figure below shows the isocost lines and the isoquant map for a firm producing golf tees.
  FIGURE 8- 6
-Refer to Figure 8- 6.Suppose this firm is producing 3000 golf tees and is at point F on the isoquant map.In order to maintain its output and minimize costs this firm should
A)move to an isoquant closer to the origin. 
B)not change its use of factors. 
C)employ more labour and less capital. 
D)employ more capital and less labour. 
E)move to an isocost line further from the origin.

Quizplus · Accepted Answer

To minimize costs while maintaining output, the firm should adjust its input combination to reach the lowest isocost line that still touches the isoquant. If the firm is at point F, employing more capital and less labor may allow it to reach a lower isocost line, assuming capital is relatively cheaper than labor.

The Figure Below Shows the Isocost Lines and the Isoquant