Question

If we know the firm's quantity to be produced, we can find the optimal inputs to use through a maximization problem that uses an isocost line as the constraint.

a) True
b) False

Answer 1

True. By using a maximization problem and an isocost line as a constraint, we can find the optimal inputs to use when we know the firm's quantity to be produced.

Step-by-step explanation:

True. By using a maximization problem and an isocost line as a constraint, we can find the optimal inputs to use when we know the firm's quantity to be produced. This is done by setting up the problem as follows:

Maximize: Firm's production function (output)

Subject to: Isocost line equation (constraint)

The isocost line represents the firm's total cost for different combinations of inputs. By maximizing the production function while staying within the cost constraint, we can determine the optimal inputs to use for a given quantity of output.