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L-shaped isoquants describe production systems in which inputs are perfect substitutes. Is this statement correct or not and why?

Sagot :

Answer: False

Explanation:

An isoquant is a simply a curve or a graphical representation of the inputs that are required to yield identical output levels. An isoquant simply means quantity of output that is constant.

L-shaped isoquants describing production systems in which inputs are perfect substitutes is false. It is used to describe scenarios whereby the inputs in question are complements.