Answer to Question #208062 in Microeconomics for Muba

Question

    I.  What is the slope of an iso-cost line equal to and why? Provide mathematical explanation

Answer 1

The slope of an iso-cost line is equal to the slope of an isoquant since the slope of an isoquant tells the firm how much capital is needed to replace a unit of labor to maintain the output while the slope of an iso-cost line shows the relative price of the inputs.