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JAMB Economics 2012 Question 22

Question 22

Theory of Production

The equilibrium point of a firm is attained at the point where the isoquant is

  1. A.greater than the isocost
  2. B.less than the isocost
  3. C.tangent to the isocost
  4. D.greater than the output.
Show the answer and explanation

Answer: C (tangent to the isocost)

Explanation

The least-cost combination of inputs is where an isoquant just touches (is tangent to) the isocost line.