The expansion path
A) shows how the cost-minimizing input choices change as the firm's output level changes.
B) shifts if the input price ratio changes.
C) is the collection of all input combinations at which the marginal rate of technical substitution equals the input price ratio.
D) both a and c
E) all of the above

Question

Quizplus · Accepted Answer

The expansion path shows how the cost-minimizing input choices change as the firm's output level changes (A), and it is the collection of all input combinations at which the marginal rate of technical substitution equals the input price ratio (C). If the input price ratio changes, the expansion path will shift (B).

The Expansion Path