Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. Figure 7.8
-Refer to Figure 7.8. The firm is currently along isocost CE. If the price of capital is $12, then the price of labor is
A) $8.
B) $12.
C) $80.
D) $120.

Question

Refer to the information provided in Figure 7.8 below to answer the question(s) that follow.  Figure 7.8
-Refer to Figure 7.8. The firm is currently along isocost CE. If the price of capital is $12, then the price of labor is
A) $8. 
B) $12. 
C) $80. 
D) $120.

Quizplus · Accepted Answer

The slope of the isocost line is determined by the ratio of the prices of labor and capital (w/r). Given that the price of capital is $12, and assuming the slope of the isocost line corresponds to this ratio, the only option that would make sense with the given information and typical conventions of isocost lines would be $8 for the price of labor, as it would provide a plausible ratio for the slope of the isocost line.

Refer to the Information Provided in Figure 7