-Refer to Figure 26.1.The output that maximizes production efficiency for this firm is

Name: -Refer to Figure 26.1.The output that maximizes production efficiency for this firm is A)Q 1 . B)Q 2 . C)Q 3 .
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Question

-Refer to Figure 26.1.The output that maximizes production efficiency for this firm is A)Q₁. B)Q₂. C)Q₃.

Quizplus · Accepted Answer

The point where marginal rate of technical substitution (MRTS) equals the ratio of prices (Pb/Pa) is the point of production efficiency. This occurs at point C, where the isoquant curve (Q1) is tangent to the isocost line. Therefore, the best choice is Q₃.