The figure below shows the isocost lines facing a firm producing golf tees.
FIGURE 8- 5
-Refer to Figure 8- 5.If the cost- minimizing firm is initially producing at a point on isocost line 1 and then moves to a point on isocost line 3,we can say that
A)the per unit prices of capital and labour have fallen by 50%.
B)the firm is producing more efficiently.
C)the per unit prices of capital and labour have each doubled.
D)the output of golf tees has doubled.
E)the firm's level of output has increased.

Question

The figure below shows the isocost lines facing a firm producing golf tees.
  FIGURE 8- 5
-Refer to Figure 8- 5.If the cost- minimizing firm is initially producing at a point on isocost line 1 and then moves to a point on isocost line 3,we can say that
A)the per unit prices of capital and labour have fallen by 50%. 
B)the firm is producing more efficiently. 
C)the per unit prices of capital and labour have each doubled. 
D)the output of golf tees has doubled. 
E)the firm's level of output has increased.

Quizplus · Accepted Answer

Moving from isocost line 1 to isocost line 3 indicates that the firm is using a higher level of inputs, which suggests an increase in the firm's level of output, assuming the firm is cost-minimizing.

The Figure Below Shows the Isocost Lines Facing a Firm