The absolute value of the slope of the isocost line is equal to the ratio of input prices.

Name: The absolute value of the slope of the isocost line is equal to the ratio of input prices.
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Question

Quizplus · Accepted Answer

The slope of the isocost line, which represents the combinations of inputs that a firm can purchase for a given total cost, is determined by the negative ratio of the prices of the inputs. This means the absolute value of this slope indeed equals the ratio of the input prices.

The Absolute Value of the Slope of the Isocost Line