The Slope of a Firm's Isocost Line Is Equal to the Ratio

question 121

Multiple Choice

The slope of a firm's isocost line is equal to the ratio of

• A)the marginal products of its factors.
• B)the marginal rate of substitution between factors.
• C)the factor prices.
• D)total variable cost to total cost.
• E)product prices.

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decline in its value due to wear and tear.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in net profit or loss.

Fixed Assets

Physical assets with a useful life greater than one year, which are used in the operations of a business, such as machinery or buildings.

Net Cash Flow

The difference between the cash inflows and cash outflows in a business over a specified period.