Suppose a firm moves from one isoquant to an isoquant further from the origin on an isoquant map.This movement indicates that
A)factor prices for all inputs have increased.
B)the price of capital has decreased.
C)the firm has increased its plant size.
D)the firm has hired more labour.
E)the firm has increased its level of output.

Question

Quizplus · Accepted Answer

An isoquant is a curve that depicts all possible combinations of inputs that yield the same level of output. Moving from one isoquant to another further from the origin indicates an increase in the level of output. Therefore, choice E, "the firm has increased its level of output" is the best choice. The other choices are not necessarily true based on the information provided.

Suppose a Firm Moves from One Isoquant to an Isoquant