A firm's (long run) output expansion path is

Question

BlackTom AI · Accepted Answer

The question asks about the long-run output expansion path.

First, recall what the expansion path represents: in the long run, all inputs are variable, so a firm can choose different input quantities to produce different levels of output. For each potential level of output, the firm will select the cost-minimizing combination of inputs given input prices; the collection of these cost-minimizing input bundles as output varies traces out the expansion path.

Now, evaluate the statement provided as the answer. The statement says: 'a curve that shows the least-cost combination of inputs needed to produce each level of output for given input prices.' This aligns with the standard definition of the long-run expansion path: it maps each output level to the least-cost input mix, holding input prices constant.

To contrast with other possible framings (had they been offered):
- If the focus were on the short run, one would not have a fully variable input set, so the concept would differ and the expansion path would not be defined in the same way.
- If one interpreted expansion path as merely a technological envelope or a simple isoquant only, that would neglect the cost-minimization aspect across output levels.
- If the notion were about a locus unrelated to input prices, it would miss the cost-minimization condition that ties input choices to prices.

In summary, the claim correctly identifies the long-run expansion path as the curve of least-cost input combinations for each level of output, given input prices.

ECON 4001.01 SP2025 (19496) Week 6 quiz

A firm's (long run) output expansion path is

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