Question

1.5 points Save Answer The diagram below represents the isoquant map for a firm currently operating at point A. Suppose you work for this firm as an analyst. Recently, you met with Human Resources and the Production Dept. and they wanted to achieve three goals in the long run: (1) layoff some workers, (ii) become more capital intensive, and (iii) raise output. Moving to which point on the diagram would achieve all three goals? Capital Labor Labor

Answer 1

Answer
Point E

Lay off some workers means the point should be left of point A as labor on the x-axis
the points are B, C, E

Become capital intensive means the point should be above A as capital is on the y-axis
the points are E, B, C
Raise output means it should be on a higher isoquant curve.
the point should be E

so the firm should produce at point E.