CA Foundation · Business Economics · Theory of Production and Cost
An isoquant map is drawn for a firm. Which of the following statements about isoquants is correct?
A higher isoquant represents a higher level of output. Isoquants farther from the origin use more inputs and yield more output, whereas equal-cost combinations belong to isocost lines, and isoquants never intersect or slope upward.
- ATwo isoquants can intersect if they show different outputs
- BA higher isoquant represents a higher level of outputCorrect
- CIsoquants slope upward when both inputs are productive
- DAn isoquant shows combinations of inputs costing the same amount
Explanation
Isoquants farther from the origin use more of the inputs and so represent greater output. Isoquants cannot intersect, as that would imply one input combination gives two different outputs. With productive inputs they slope downward. Combinations with equal cost describe an isocost line, not an isoquant.
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