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Agriculture Economics QUESTION #11879
Question 1
Optimal input combination (least-cost point) occurs where the isoquant is tangent to the isocost line, which requires:
  • $MRTS = \dfrac{P_x}{P_y}$✔️
  • Total cost equals total revenue
  • Marginal product of each input equals zero
  • The isoquant crosses the origin
Correct Answer Explanation
Cost minimization for a given output occurs where the slope of the isoquant ($MRTS$) equals the slope of the isocost line, the input price ratio $\dfrac{P_x}{P_y}$.