If an isoquant intersects an isocost line at two points, a manager can surmise that:

Question

Quizplus · Accepted Answer

Isoquants represent combinations of inputs that yield the same level of output, and isocost lines represent combinations of inputs that cost the same amount. If an isoquant intersects an isocost line at two points, it implies that there is inefficiency in the input combination. A lower isocost line that touches the isoquant at only one point would represent a more efficient, least-cost combination of inputs for the same level of output, indicating that a better, more cost-effective solution exists.

If an Isoquant Intersects an Isocost Line at Two Points