Asked by Xandrei Lugay on May 16, 2024
Verified
A firm has the production function f(x, y) x minx, y.The isoquants for the firm
A) are L-shaped with the corners of the L's on the line y x.
B) are L-shaped with the corners of the L's on the line y x 1.
C) consist of two line segments, one vertical and the other with a slope of 1.
D) consist of two line segments, one horizontal and the other with a slope of 1.
E) are upside down L-shaped.
Isoquants
Curves representing combinations of inputs that result in the production of the same level of output, useful in production theory for understanding input substitutions.
Production Function
An equation describing the relationship between the inputs a firm uses and the output it creates, used in the analysis of production efficiency.
- Comprehend the meaning of isoquants and appreciate their importance in the context of production theory.
Verified Answer
YG
Yajaira GonzálezMay 19, 2024
Final Answer :
C
Explanation :
This production function exhibits constant returns to scale, as doubling both inputs doubles output. Therefore, the isoquants will be linear. Note that the function contains the term "min{F(x,y),F}", which means that the isoquants will be L-shaped. Specifically, because the vertical axis is y x 1, the L-shape will consist of one vertical line segment and one with a slope of 1.
Learning Objectives
- Comprehend the meaning of isoquants and appreciate their importance in the context of production theory.