The profit function = aQX + bQY, can be written as QY = /b - a/bQY where a and b are the profit contributions of products X and Y, respectively.If both profit contributions increase by a fixed percentage, isoprofit line:
A)slope decreases.
B)slope is unaffected.
C)slope increases.
D)none of these.

Question

Quizplus · Accepted Answer

The isoprofit line is determined by the profit function, so as long as the ratio between a and b remains the same, the slope of the isoprofit line will not be affected by a fixed percentage increase in both profit contributions. Therefore, the correct answer is B. The slope of the isoprofit line is determined by the ratio of the profit contributions of products X and Y, i.e. a/b. If both profit contributions increase by the same percentage, the ratio of a/b remains the same and therefore the slope of the isoprofit line is unaffected.

The Profit Function = AQX + BQY, Can Be Written