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 each doubled.
B)the output of golf tees has doubled.
C)the per unit prices of capital and labour have fallen by 50%.
D)the firm's level of output has increased.
E)the firm is producing more efficiently.

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 each doubled. 
B)the output of golf tees has doubled. 
C)the per unit prices of capital and labour have fallen by 50%. 
D)the firm's level of output has increased. 
E)the firm is producing more efficiently.

Quizplus · Accepted Answer

Moving from isocost line 1 to isocost line 3 indicates that the firm is using more resources, which typically implies an increase in the level of output.

The Figure Below Shows the Isocost Lines Facing a Firm