Isoquants are usually drawn convex when viewed from the origin, reflecting the standard assumption
A) that both factors are subject to the law of diminishing returns.
B) that the variable factor is subject to the law of diminishing returns.
C) that both factors are subject to increasing returns.
D) negative marginal productivity of all factors.
E) the positive marginal productivity of all factors.

Question

Quizplus · Accepted Answer

The convex shape of isoquants reflects the assumption that both factors are subject to the law of diminishing returns. As more and more of one factor is used with a fixed amount of the other factor, the marginal productivity of the variable factor eventually decreases, leading to a convex isoquant shape.

Isoquants Are Usually Drawn Convex When Viewed from the Origin