A firm uses capital and labor to produce an output.The slope of the isocost line equals:
A) the ratio of the marginal productivities of the inputs.
B) the ratio of the output prices.
C) the ratio of the input prices.
D) the ratio of capital to labor.

Question

Quizplus · Accepted Answer

The slope of the isocost line is given by the ratio of the two input prices since it indicates the rate at which the firm can trade off one input for another while keeping the total cost constant.

A Firm Uses Capital and Labor to Produce an Output