Question #277882
what is the meaning of isocost slope? Provide a mathematical explanation.
Expert's answer
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.
Where W is price of labour
r is the price of capital
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