Refer to the information provided in Figure 7.10 below to answer the questions that follow. Figure 7.10
-Refer to Figure 7.10. The firm's isocost line could shift from AB to CD if
A) the price of capital decreased.
B) the firm's total expenditures increased by 50%.
C) the price of capital and labor each decreased by 33.3%.
D) either B or C

Question

Refer to the information provided in Figure 7.10 below to answer the questions that follow.  Figure 7.10
-Refer to Figure 7.10. The firm's isocost line could shift from AB to CD if
A) the price of capital decreased. 
B) the firm's total expenditures increased by 50%. 
C) the price of capital and labor each decreased by 33.3%. 
D) either B or C

Quizplus · Accepted Answer

The isocost line represents combinations of capital and labor that a firm can purchase for a given total cost. It can shift outward (from AB to CD) if the firm's total expenditures increase (option B) or if the prices of both inputs decrease, allowing the firm to purchase more of both for the same cost (option C).

Refer to the Information Provided in Figure 7