Karl has a home business that consists of only himself and his computer. If he were to analyze his operations in the form of a long run production function his isoquants would
A)be straight lines with a negative slope.
B)be L shaped.
C)be concave from above.
D)be straight lines with a positive slope.

Question

Quizplus · Accepted Answer

Karl's home business, consisting of only himself and his computer, represents a fixed proportion production process where inputs (his labor and the computer) are used in fixed proportions to produce output. In such cases, the isoquants, which show combinations of inputs that yield the same level of output, are L-shaped. This reflects the fact that neither input can substitute for the other; both are required in fixed amounts to produce any output.

Karl Has a Home Business That Consists of Only Himself