The slope of a firm's isocost line is equal to the ratio of
A) the factor prices.
B) the marginal rate of substitution between factors.
C) product prices.
D) the marginal products of its factors.
E) total variable cost to total cost.

Question

Quizplus · Accepted Answer

The slope of an isocost line represents the rate at which the firm can trade one factor for another while keeping the total cost of production constant. This slope is determined by the relative prices of the factors. Therefore, the best choice is A, the factor prices.

The Slope of a Firm's Isocost Line Is Equal to the Ratio