Question

Assume that labor is plotted on the horizontal axis and capital is plotted on the vertical axis. A firm plans to spend $1,000 per week on inputs and confronts a wage rate of $10 per hour and a capital rental rate of $20 per hour. Given this information, what will be the slope of the isocost curve?

A. -2
b. -1/2
c. -100
d. -50

Answer 1

Answer:

b.-1/2

Explanation:

Calculation for what will be the slope of the isocost curve

Using this formula

Slope of isocost line = -Wage rate/Capital rental rate

Let plug in the formula

Slope of isocost line=-10/20

Slope of isocost line=-1/2

Therefore the Slope of isocost line will be -1/2