Why Are the Slopes of Isocost Lines Constant

question 36

Multiple Choice

Why are the slopes of isocost lines constant?

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

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Definitions:

Instinct

An ingrained behavior observed in animals that consistently occurs in reaction to designated stimuli.

Drive-Reduction Theory

A psychological theory suggesting that motivation arises from biological needs driving an individual to act in ways that reduce drives and achieve homeostasis.

Physiological Needs

The most basic human necessities required to sustain life, such as air, water, food, shelter, and sleep, according to Maslow's hierarchy of needs.

Psychological Wants

Desires primarily based on emotional or mental fulfillment rather than basic survival or physiological needs.