Why are the slopes of isocost lines constant?
A. because firms must use capital and labor inputs in fixed proportions.
B. because firms must use less labor if employing more capital.
C. because firms can hire as much of an input as they desire without changing wages or rental rates.
D. because the marginal rate of technical substitution of labor for capital is constant.

Respuesta :

Answer:

D. because the marginal rate of technical substitution of labor for capital is constant.

Explanation:

An isoquant is a curve that represents all possible combinations of inputs, for example capital and labor, that result in the same production volume. In turn, the Technical Marginal Replacement Rate represents the amount that the company can reduce from one of the inputs (eg capital) when using an extra unit from the other input (eg labor), so that production is maintained. It turns out that by definition, this rate is exactly the slope of the curve at each point that represents the combination of factors of production. Thus, if the combination of factors changes but the same production is maintained, the Technical Marginal Replacement Rate will be the same and therefore the inclination of the isoquant curve will not change.

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