Question

1 pts Question 10 Which of the following is most accurate about an isoquant? O The isoquant of a higher level of output is always shown closer to the origin. 0 Anoutput level Q can only be produced by input combinations on its isoquant The isoquants of two different output levels cannot cross each other in the short run, but in the long run they may cross None of the above is correct. 1 pts Question 11 11. Which of the following is most accurate about an isocost? The isocost line is also termed as budget line, and it shows the total cost of production with a given set of input prices To uniquely draw an isocost, we need to know three values: TC, PL and PK The Intercept of an isocost on the K axis represents the amount of K that can be bought if the given total cost TC Is used to buy K only All above are correct Question 12 1 pts 12. When the total cost is minimized for producing output Q at the input combination selected, the slope of the isocost is equal to the slope of the isoquant O the Marginal Rate of Technical Substitution (MRTSLK) equals the input ratio of L and K the productivity ratio of labor and capital equals their total-cost ratio. all of the above are correct

Answer 1

10. An output level Q can only be produced by input combinations on its isoquant. Hence,option(B) is correct.

11. The isocost line is also termed as budget line and it shows the total cost of production with a given set of input prices, To uniquely draw an isoquant ,we need to know values TC, PL , PK , The intercept of an isocost on the K axis represents the amount of K that can be bought if the given total cost TC is used to buy K only. Hence,option(D) is correct.

12. When the total cost is minimized for producing output Q, at the input combination selected , the slope of the isocost is equal to the slope of the isoquant ,the marginal rate of technical substitution equals the input ratios of L and K and the productivity ratio of labor and capital equals their total cost ratio. Hence,option(D) is correct.

13. If a isocost's intercept on the L axis moves outward while its intercept on the K axis moves inward , then we can infer that price of L decreases and price of K increases. Hence,option(C) is correct.