[amp_mcq option1=”Rate of substitution” option2=”Cost rate” option3=”Rate of production” option4=”None of these” correct=”option1″]<\/p>\n
The correct answer is: A. Rate of substitution.<\/p>\n
An isoquant is a curve that shows all the combinations of inputs that produce the same level of output. The rate of substitution is the amount of one input that must be given up to obtain an additional unit of another input while keeping output constant. The rate of substitution is not constant along an isoquant, but it is diminishing. This means that as you use more of one input, you have to give up less of the other input to keep output constant.<\/p>\n
The rate of substitution is important because it tells us how much one input can be substituted for another without changing output. This information is useful for firms that are trying to find the least-cost combination of inputs to produce a given level of output.<\/p>\n
The other options are incorrect because they do not affect the relationship of the isoquant curve line. The cost rate is the amount of money that a firm spends on inputs. The rate of production is the amount of output that a firm produces. Neither of these factors affect the relationship between the inputs and outputs that are represented by an isoquant.<\/p>\n","protected":false},"excerpt":{"rendered":"
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