Questions

2251-ECON-301-01Z-J1-1027 Quiz 8 (1% of Course Grade) - Chapter 21 - Cost Minimization

Multiple dropdown selections

The output expansion path is the locus of [ Select ] profit-maximization tangencies cost-minimizing tangencies . The curve shows how inputs increase as output increases. The output expansion path does not have to be a straight line, and it can also be downward sloping if one of the inputs is an [ Select ] inferior input normal input .

View Explanation

Verified Answer

Please login to view

Step-by-Step Analysis

The question presents a production theory concept with three blanks to fill. We will analyze each statement in turn and relate it to the idea of the output expansion path (also known as the input expansion path). First blank: 'The output expansion path is the locus of ______.' - The correct interpretation is that the expansion path traces cost-minimizing tangencies for each level of output. In production theory, firms choose input combinations that minimize cost given a target output, and the set of these cost-minimizing input bundles as output changes forms the expansion path. This aligns with standard theory that the curve is formed by connecting cost-minimizing tangency points of isoquants with t......Login to view full explanation

Log in for full answers

We've collected over 50,000 authentic exam questions and detailed explanations from around the globe. Log in now and get instant access to the answers!