Why are the slopes of isocost lines constant?
A) because firms must use capital and labor inputs in fixed proportions
B) because firms can hire as much of an input as they desire without changing wages or rental rates
C) because firms must use less labor if employing more capital
D) because the marginal rate of technical substitution of labor for capital is constant

Question

Quizplus · Accepted Answer

The slope of an isocost line is determined by the ratio of the prices of labor and capital, which are constant, allowing firms to hire as much of an input as they desire without changing wages or rental rates.

Why Are the Slopes of Isocost Lines Constant