The least costly way to produce a given level of output is indicated by the point of tangency between a budget line and the production indifference curve corresponding to that level of output.

Question

Quizplus · Accepted Answer

This statement is true according to the theory of consumer choice and the concept of marginal rate of substitution. The point of tangency between the budget line and the production indifference curve represents the optimal combination of inputs that minimizes production costs while achieving the desired level of output.

The Least Costly Way to Produce a Given Level of Output