FIGURE 8- 4
-Refer to Figure 8- 4,with the isoquants and isocost line as shown.A firm that is producing at point C can reduce its costs for producing 1000 units by employing
A)less labour and the same capital.
B)less capital and more labour.
C)less capital and less labour.
D)more capital and more labour.
E)more capital and less labour.

Question

FIGURE 8- 4 
-Refer to Figure 8- 4,with the isoquants and isocost line as shown.A firm that is producing at point C can reduce its costs for producing 1000 units by employing
A)less labour and the same capital. 
B)less capital and more labour. 
C)less capital and less labour. 
D)more capital and more labour. 
E)more capital and less labour.

Quizplus · Accepted Answer

At point C, the firm is not on the lowest isocost line for the given isoquant. By moving to a point where the isocost line is tangent to the isoquant, the firm can reduce costs. This typically involves using more capital and less labor if the isocost line is flatter than the isoquant at point C.