An isocost line depicts:
A)the minimum cost required to produce a certain level of output, given input prices.
B)the input combination to produce a certain level of output.
C)the input combinations that satisfy a budget constraint, given input prices.
D)the maximum output that can be produced by a firm given its budget constraint.

Question

Quizplus · Accepted Answer

The isocost line represents the combination of inputs that a firm can choose to produce a certain level of output while satisfying its budget constraint. It shows all the input combinations that are available to the firm at a given cost given the prices of the inputs. Therefore, option C is the correct answer. Option A is incorrect because it represents the relationship between input prices and production costs. Option B is incorrect because it refers to the specific input combination for a certain level of output. Option D is the incorrect option because it refers to the constraint of the production function not the budget constraints.

An Isocost Line Depicts