A firm's least-cost position for producing a given output level occurs at that point where
A)the isocost line intersects the highest isoquant.
B)the isocost and isoquant intersect the horizontal axis.
C)the isoquant is closest to the origin.
D)the isocost line and the isoquant are tangent to each other.
E)the isocost and isoquant intersect the vertical axis.

Question

Quizplus · Accepted Answer

The point of least-cost is where the firm is using the least amount of inputs to produce the desired output. This occurs where the isoquant and isocost line intersect and are tangent to each other. At this point, the firm is using its resources in the most efficient manner, minimizing its cost of production.

A Firm's Least-Cost Position for Producing a Given Output Level