Economics • Economic BasicsMedium
In the context of production theory, what does an expansion path illustrate?
A. The change in total output resulting from a proportional increase in all inputs.
B. The locus of cost-minimizing input combinations as output expands, keeping factor prices constant.✓ Correct Answer
C. The maximum combinations of two outputs that can be produced with fixed inputs.
D. The path of maximum revenue when product prices vary.
💡 Solution & Explanation
An expansion path connects the points of tangency between isocost lines and isoquants, mapping out optimal input combinations as production scales up under constant factor prices. It functions similarly to the income consumption curve in consumer theory.
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