When the cost minimizing combination of inputs is being used and there is no corner solution,

A. the isoquant line is tangent to the isocost line.

B. the marginal products of the inputs are equal to each other.

C. the marginal product of each input is equal to its cost.

D. the costs of the inputs are equal to each other.

E. All of the above.

Question

Business

Cordell King

17 December, 00:59

When the cost minimizing combination of inputs is being used and there is no corner solution,

A. the isoquant line is tangent to the isocost line.

B. the marginal products of the inputs are equal to each other.

C. the marginal product of each input is equal to its cost.

D. the costs of the inputs are equal to each other.

E. All of the above.

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Answers (1)

Know the Answer?

Jaydan Gates · Answer 1

A. the iso-quant line is tangent to the iso-cost line.

Explanation:

Cost minimization refers to the decrease in level of cost of production for certain specified level of production.

Iso quant line represents the labor and capital combinations keeping the total cost same. The least combination represents the tangent to isoquant, basically representing the idle choice of labor and capital.

In this manner the company chooses the idle way of cost minimization.