If the isoquants are straight lines or L-shaped,then a cost-minimizing firm will
A) not be able to minimize costs.
B) find the lowest isocost line touching the relevant isoquant.
C) find the highest isocost line touching the relevant isoquant.
D) choose not to produce any output.

Question

Quizplus · Accepted Answer

When isoquants are straight lines or L-shaped, they exhibit constant returns to scale. In this case, the cost-minimizing firm will choose the lowest isocost line that touches the relevant isoquant. This is because any point above the isocost line will have a higher cost than necessary, while any point below the isocost line will not be efficient since it will produce less output than necessary. Therefore, the best choice is to find the lowest isocost line touching the relevant isoquant, which minimizes costs while producing the desired output level.

If the Isoquants Are Straight Lines or L-Shaped,then a Cost-Minimizing