What do all the points on an isoquant have in common? What does the slope of the
ID: 1152005 • Letter: W
Question
What do all the points on an isoquant have in common?
What does the slope of the isoquant represent?
What is the isocost line similar to in consumer behavior? How does it differ?
With labor graphed on the x-axis, what happens to the isocost line when labor becomes more expensive? When capital becomes more expensive?
What does a producer’s expansion path show? What variables are graphed and what points are plotted?
What do all the points on an isoquant have in common?
What does the slope of the isoquant represent?
What is the isocost line similar to in consumer behavior? How does it differ?
With labor graphed on the x-axis, what happens to the isocost line when labor becomes more expensive? When capital becomes more expensive?
What does a producer’s expansion path show? What variables are graphed and what points are plotted?
Explanation / Answer
Ans 1)
All points on Isoquant that is an indifference curve will provide same utility level on comnsupution of that point comprises of units of goods and/ or services
Ans 2)
Slope of Isoquant represnets Marginal Rate of substitution which tells us that one unit of good x sacrificed for number of units of good y to maintian the same utlity OR Price ratio is the slope of IC at that IC is tangent with budget line
Ans 3)
so cost line shows various combinations of labour and capital that firm can buy for a given factor prices
Slope of Isoquant =Px/Py and Slope of Isocost =Pl/Pk
Isoquant curve is nonlinear whereas Isocost curves are linear
Similarirites are two Isoquant curves
Ans 4)
When wages become expensive firm consumes less of labour hence Isocost line move on x axis towards origin assuming quantity of capital is constant and similar reation when capital becomes costlier assuming labour units consumed remains the same.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.