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

---

Definitions:

Multiple Consolidation

The process of integrating financial statements from multiple subsidiaries into one aggregated set of financial statements for the parent company.

Ownership Interests

The rights and shares held by an entity or individual in another company, evidencing an ownership stake.

Direct and Indirect Ownership Interests

Holdings in a company that can be straightforward (direct) or through another entity (indirect).

Sequential Consolidation Method

A method of accounting that involves integrating the financial information of successive levels of subsidiaries within a group, typically starting with the parent company.