The graph represents a firm's cost function, illustrating the relationship between total cost (TC), capital (K), and labor (L) for producing a given quantity (Q). The curve marked $ Q_1 = 100 $ indicates an isoquant, showing all combinations of K and L that yield 100 units of output. The line labeled $ TC_1 $ represents an isocost line, showing all combinations of K and L that result in the same total cost.Key Points on the Graph:- **Point T**: Located at the higher level of K and intersects the isoquant $ Q_1 = 100 $.- **Point E**: Represents an equilibrium where the isocost line is tangent to the isoquant, indicating both technical and cost efficiency.- **Point U**: It illustrates a different combination of K and L.Multiple Choice Question:At point T, we must evaluate the firm's cost-efficiency and technical efficiency. The options are:- **A**: Is a cost minimizer but not technically efficient.- **B**: Is a cost minimizer.- **C**: Is technically inefficient and not a cost minimizer.- **D**: Is technically efficient but not a cost minimizer.- **E**: None of the above (correct answer).Analysis:Point T does not lie on the isocost line tangent to the isoquant, suggesting it is neither a cost minimizer nor technically efficient. Therefore, the correct answer is **E: None of the above**.

Here, given graph shows total cost line and isocost curve of a specfiic firm.

Consider the graph below for a firm. At point T, we know that the firm K TC = Total Cost; Q=f(K, L); 100 70 Q, =100 TC, 60 80 A. Is a cost minimizer but not technical efficient. B. Is a cost minimizer. C. Is technical inefficient and a not a cost minimizer. D. Is technical efficient but not a cost minimizer. E. None of the above.

Consider the graph below for a firm. At point T, we know that the firm K TC = Total Cost; Q=f(K, L); 100 70 Q, =100 TC, 60 80 A. Is a cost minimizer but not technical efficient. B. Is a cost minimizer. C. Is technical inefficient and a not a cost minimizer. D. Is technical efficient but not a cost minimizer. E. None of the above.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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