An isocost line has a
A)positive slope because the two inputs can replace each other in production.
B)negative slope because the two inputs can replace each other in production.
C)negative slope because the two inputs are complementary to each other in production.
D)positive slope because the two inputs are complementary to each other in production.
E)slope equal to zero because the two inputs are basically identical.

Question

Quizplus · Accepted Answer

An isocost line represents all the combinations of two inputs that give the same total cost. The slope of the isocost line is the ratio of the prices of the two inputs. Since the prices are constant, the slope is negative. The two inputs can replace each other in production, meaning more of one input can be substituted for less of the other input while still producing the same output level. This is why the slope is negative. Therefore, the correct answer is B.

An Isocost Line Has a