A tangency between an isocost line and an isoquant shows all the following,except:
A)the maximum output attainable by a firm at a given cost.
B)the minimum cost necessary to produce a given output.
C)an input combination where the ratio of marginal products equals the ratio of the input prices.
D)an input combination where the returns to labor and capital inputs are equal.

Question

Quizplus · Accepted Answer

A tangency between an isocost line and an isoquant shows the minimum cost necessary to produce a given output, an input combination where the ratio of marginal products equals the ratio of the input prices, and the maximum output attainable by a firm at a given cost. However, it does not indicate an input combination where the returns to labor and capital inputs are equal.

A Tangency Between an Isocost Line and an Isoquant Shows