If capital is measured on the vertical axis and labor is measured on the horizontal axis, the slope of an isoquant can be interpreted as the:
A) rate at which the firm can replace capital with labor without changing the output rate.
B) average rate at which the firm can replace capital with labor without changing the output rate.
C) marginal product of labor.
D) marginal product of capital.

Question

Quizplus · Accepted Answer

The slope of an isoquant represents the rate at which the firm can substitute between capital and labor while holding output constant. Therefore, it shows the rate at which the firm can replace capital with labor without changing the output rate.

If Capital Is Measured on the Vertical Axis and Labor