As a firm moves to higher isocost lines,
A)its profits increase.
B)its revenue increases.
C)its input price ratio increases.
D)its total cost increases.

Question

Quizplus · Accepted Answer

Moving to higher isocost lines means that the firm is increasing its total cost as it is using a higher combination of inputs to produce the same level of output. Therefore, the correct answer is D - its total cost increases. Choices A and B are incorrect as profits and revenue are not necessarily increasing with higher isocost lines. Choice C is also incorrect as the input price ratio can either increase or decrease depending on the change in input prices.

As a Firm Moves to Higher Isocost Lines