CMA Foundation · Fundamentals of Business Economics and Management · Theory of Production
An isoquant is best described as a curve that shows
An isoquant is a curve showing all combinations of two inputs, such as labour and capital, that produce the same level of output. Equal-cost combinations are shown by the isocost line, not the isoquant, so the first option is correct.
- Aall combinations of two inputs that yield the same level of outputCorrect
- Ball combinations of two inputs that cost the firm the same total amount
- Call levels of output a firm can produce with a fixed budget
- Dthe relationship between total cost and output in the short run
Explanation
An isoquant joins the different combinations of two inputs, such as labour and capital, that give the same output. The curve that joins combinations costing the same total amount is the isocost line, which is the distractor in option 2. Isoquants are drawn using technology, not prices.
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