Question

A firm's ""iso-costs line"" shows:

a. All combinations of two outputs that yield the same total cost.
b. All combinations of two inputs that yield the same total cost.
c. All combinations of two outputs that yield the same total revenue.
d. All combinations of two inputs that yield the same total output.

Answer 1

The firm's iso-costs line shows all combinations of two inputs that yield the same total cost.

Step-by-step explanation:

The firm's iso-costs line shows all combinations of two inputs that yield the same total cost.

For example, let's say a firm can produce 10 units of output with 2 units of labor and 3 units of capital or with 3 units of labor and 1 unit of capital. Both combinations would have the same total cost.

The iso-costs line helps firms determine the efficient allocation of inputs in order to minimize costs while producing the desired level of output.