CA Foundation · Business Economics · Theory of Production and Cost
Two isoquants of a firm, Q1 = 100 units and Q2 = 200 units, are drawn on the same graph. Which statement is correct?
The 200-unit isoquant lies farther from the origin than the 100-unit one, because producing more output requires more inputs. Isoquants never intersect, since one input combination cannot yield two different output levels, and their slopes need not be the same.
- AThe two isoquants can intersect at one point
- BThe 200-unit isoquant lies farther from the origin than the 100-unit isoquantCorrect
- CThe 200-unit isoquant lies closer to the origin than the 100-unit isoquant
- DBoth isoquants must have the same slope at every point
Explanation
A higher isoquant represents a larger output, which needs more of the inputs, so it lies farther from the origin. Isoquants cannot intersect, because a common point would show two different outputs from the same input combination. Their slopes need not be equal.
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