When the level of capital is plotted on the vertical axis and the level of labor is plotted on the horizontal axis,the slope of the isocost line is (assuming is the price of labor and is the price of capital and production uses only these two inputs)

Question

When the level of capital is plotted on the vertical axis and the level of labor is plotted on the horizontal axis,the slope of the isocost line is (assuming  is the price of labor and  is the price of capital and production uses only these two inputs)

Quizplus · Accepted Answer

The slope of an isocost line is equal to the ratio of the price of labor to the price of capital (-11ea71e2_6317_72a7_89cd_47776ede9460_TB1644_11/11ea71e2_6317_4b96_89cd_3f269afcb043_TB1644_11) because the firm wants to spend the same amount of money on each input. Option A represents this ratio.

When the Level of Capital Is Plotted on the Vertical