Point of Tangency between Isocost and Isoquant Curve
The point of tangency between the isocost and isoquant curve gives the optimal combination of inputs that minimize the cost of production while producing a certain level of output. This point represents the most efficient use of resources where the producer can achieve a given level of output at the lowest cost possible.

Explanation:
- Isocost Curve: The isocost curve represents all the combinations of inputs that can be purchased for a given total cost. It shows the various input combinations that can be bought with a fixed amount of money.
- Isoquant Curve: The isoquant curve represents all the combinations of inputs that produce a given level of output. It shows the different input combinations that can be used to produce a specific level of output.
- Point of Tangency: The point where the isocost curve is tangent to the isoquant curve indicates the optimal combination of inputs. At this point, the cost of production is minimized while producing the desired level of output. This is the most cost-effective way of producing a given quantity of output.
- Optimal Input Combination: The optimal input combination at the point of tangency ensures that resources are used efficiently, and the producer is operating at the lowest possible cost. Any deviation from this point would result in higher production costs without increasing output.
In conclusion, the point of tangency between the isocost and isoquant curve is crucial in determining the optimal input combination for production, leading to cost minimization and efficient resource utilization.