An isocost line reveals the
A) costs of inputs needed to produce along an isoquant.
B) costs of inputs needed to produce along an expansion path.
C) input combinations that can be purchased with a given outlay of funds.
D) output combinations that can be produced with a given outlay of funds.

Question

Quizplus · Accepted Answer

An isocost line represents all the combinations of inputs that can be purchased with a given amount of money or resources. It shows the tradeoff between the two inputs and the price of each input. The slope of the isocost line is equal to the ratio of the prices of the inputs. Therefore, option C is the correct answer.

An Isocost Line Reveals the