The slope of an isoquant tells us A) how much output increases when both inputs are increased. B) the increase in MP_L when capital increases. C) the decrease in capital necessary to keep output constant when labor increases by one unit. D) the decrease in capital necessary to keep MP_L constant when labor increases by one unit.

Question

Quizplus · Accepted Answer

The slope of an isoquant represents the rate at which one input (e.g., labor) can be substituted for another (e.g., capital) while keeping the output level constant. Thus, it shows the decrease in capital necessary to keep output constant when labor increases by one unit.

The Slope of an Isoquant Tells Us