Assume that capital is measured along the vertical axis, and labor is measured along the horizontal axis. The firm has an initial isocost line called . Now suppose that the price of labor doubles, and the price of capital falls by one-half. Which statement accurately describes the movement of the isocost line from to ?
A) The slope of the isocost line becomes flatter.
B) The slope of the isocost line becomes steeper.
C) The slope of the isocost line is unchanged.
D) We cannot determine whether the slope becomes flatter or steeper.
Correct Answer:
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Q1: When the prices of all inputs increase
Q2: The relationship between the long-run total cost
Q3: The long-run total cost curve shows:
A)the various
Q4: When average cost is "u-shaped" (neither always
Q5: A long-run total cost curve:
A)must be equal
Q7: A firm's long-run average cost curve is
Q8: When the price of all inputs increase
Q9: The long-run total cost curve tends to:
A)rotate
Q10: Suppose for a particular production function,
Q11: A long-run total cost curve:
A)always has a
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