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, as the quantity of one input that can be purchased for a given expenditure changes. This, in turn, affects the optimal input mix and the position on the isoquant curve, but does not cause it to shift. Therefore, the correct choice is B.

Changes in the Price of an Input Cause