Question

The set of all possible combinations of two inputs that produce the same level of output is known as:

• A. Isocost
• B. Indifference Curve
• C. Isoquant
• D. Budget Line

Hint:

Isoquant is used in production theory, while indifference curve is used in consumer theory.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
In the theory of production, an isoquant represents a firm's technical constraints. It shows the different ways a firm can combine inputs (like labor and capital) to achieve a constant quantity of production.
Step 2: Detailed Explanation:
The term "Isoquant" comes from "Iso" (Equal) and "Quant" (Quantity).
- Isoquant: A curve representing all input combinations that yield the same level of total output.
- Isocost: A line showing all combinations of inputs that cost the same total amount.
- Indifference Curve: Used in consumer theory to show combinations of goods providing the same utility.
- Budget Line: Shows combinations of two goods a consumer can buy given income and prices.
Step 3: Final Answer:
Since the question specifies "combinations of two inputs" and "same level of output", the answer is Isoquant.