Suppose labor is on the horizontal axis and capital on the vertical axis.If the total cost is defined by the equation TC = $400 + $15L + $10K,the slope of the isocost curve is:
A)-0.667
B)-1.5
C)-8
D)-40

Question

Quizplus · Accepted Answer

The formula for the slope of an isocost line is given by:

slope = - (cost of labor / cost of capital)

In this case, the cost of capital is $10 and the cost of labor is $15, so the slope of the isocost line is:

slope = - ($15/$10) = -1.5

Therefore, the correct choice is B.

Suppose Labor Is on the Horizontal Axis and Capital on the Vertical