Question

when we have a perfect substitutes production technology, the cost-minimizing input bundle is determined by question 3select one: a. finding the intersection of the line of veritices and the isocost line. b. comparing the slope of the isocost line with the technical rate of substitution. c. equating the slope of the isocost line with the technical rate of substitution.

Answer 1

In a perfect substitutes production technology, the cost-minimizing input bundle can be determined by equating the slope of the isocost line with the technical rate of substitution.

Step-by-step explanation:

In a perfect substitutes production technology, the cost-minimizing input bundle can be determined by equate

ing the slope of the isocost line with the technical rate of substitution. When inputs are perfect substitutes, the firm can swap one input for another without affecting the production level or costs. The isocost line represents the combinations of inputs that have the same production cost, and the technical rate of substitution represents the amount by which one input can be reduced when another input is increased while keeping the same level of output. By equating the slope of the isocost line with the technical rate of substitution, the firm can identify the input bundle that minimizes costs.