16 Questions
What does an isoquant map describe?
A production function
What do negatively sloped isoquants show?
The flexibility of production decisions
What happens to output when moving from one isoquant to another?
It increases
What shape are the isoquants in a fixed-proportions production function?
L-shaped
What is a characteristic of a production function with L-shaped isoquants?
Fixed-proportions
What is the output level at point A and D?
55 units per year
What is the implication of having L-shaped isoquants in a production function?
Only one combination of labor and capital can produce each level of output
What type of production function is associated with L-shaped isoquants?
Leontief production function
What is the output level at point B?
75 units per year
What is the implication of having a fixed-proportions production function on the use of labor and capital?
Labor and capital must be used in a fixed ratio
What is the output level at points C and E?
90 units per year
What is the primary characteristic of the MRTS at all points on an isoquant?
It is constant
What can be inferred about the production process if an isoquant represents a particular output level?
The production process can be either labor-intensive or capital-intensive
What does a point on an isoquant represent?
A specific combination of labor and capital
What is the significance of points A, B, and C on the isoquant?
They represent different combinations of labor and capital that produce the same level of output
What is the implication of a firm being at point A on the isoquant?
The firm is highly capital-intensive
Understand the properties of production functions, specifically those with L-shaped isoquants. Learn how fixed-proportions production functions work and the implications for labor and capital combinations.
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