Asked by Katie Moules on Jul 08, 2024
Verified
An L-shaped isoquant:
A) is impossible.
B) would indicate that the firm could switch from one output to another costlessly.
C) would indicate that the firm could not switch from one output to another.
D) would indicate that capital and labor cannot be substituted for each other in production.
E) would indicate that capital and labor are perfect substitutes in production.
L-shaped Isoquant
A graphical representation in production theory showing combinations of input factors that yield the same output, where the shape indicates perfect substitutability between inputs up to a point, followed by no substitutability.
Perfect Substitutes
Goods or services that can be used in exact place of each other with no loss of utility to the consumer, often characterized by a constant marginal rate of substitution.
Production
The process of creating goods or services by combining various inputs like labor, raw materials, and machinery.
- Recognize different types of production functions, including fixed-proportion and variable-proportion systems.
Verified Answer
Learning Objectives
- Recognize different types of production functions, including fixed-proportion and variable-proportion systems.
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