Use the following figure to answer the question : Figure 16-1 :shows the isoquants,IQ 1 and IQ 2 ,for a competitive firm. -Refer to Figure 16-1.Which of the following is true at point C? A)At point C,the marginal product of labor and capital is maximized. B)Point C identifies the level of output that gives the firm the highest marginal revenue. C)Point C identifies the least cost method of producing output Q₁. D)Point C shows that the firm operates with constant returns to scale.

Question

Quizplus · Accepted Answer

Point C represents the least cost method of producing output Q₁ because it is the point where the isoquant (IQ₁) is tangent to the isocost line. This means that the firm is producing the desired amount of output while minimizing its total cost of production. Therefore, option C is the correct answer. Option A is incorrect because the maximum marginal product of labor and capital would be at the point where the isoquant is steepest, which is not at point C. Option B is incorrect because there is no information in the figure about marginal revenue. Option D is incorrect because the isoquant curves are not symmetric, indicating that the firm does not operate under constant returns to scale.

Use the Following Figure to Answer the Question : Figure