Changes in the price of an input cause:
A) isoquants to become steeper.
B) slope changes in the isocost line.
C) parallel shifts of the isocost lines.
D) changes in both the isoquants and isocosts of equal magnitude.

Question

Quizplus · Accepted Answer

Changes in the price of an input affect the slope of the isocost line because the isocost line represents combinations of inputs that can be purchased for a given total cost. A change in the price of one input alters the rate at which one input can be substituted for another while maintaining the same total cost, thus changing the slope of the isocost line.

Changes in the Price of an Input Cause