Assume That Capital Is Measured Along the Vertical Axis, and Labor

question 72

Multiple Choice

Assume that capital is measured along the vertical axis, and labor is measured along the horizontal axis. The firm has an initial isocost line called $T C _ { 1 }$ . Now suppose that the price of labor trebles and the price of capital also trebles. Which statement accurately describes the movement of the isocost line from $T C _ { 1 }$ to $T C _ { 2 }$ ?

• A)The slope of the isocost line becomes flatter.
• B)The slope of the isocost line becomes steeper.
• C)The slope of the isocost line is unchanged.
• D)We cannot determine whether the slope becomes flatter or steeper.

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Definitions:

Net Earnings

The amount of income left over after all deductions, including taxes, expenses, and allowances, have been subtracted from gross earnings.

SUTA Purposes

Relating to State Unemployment Tax Act, it's for state-level funding of unemployment benefits.

FUTA Tax

Federal Unemployment Tax Act tax, used to fund state workforce agencies.

Timely Deposits

The IRS requirement that taxpayers must deposit certain types of taxes (e.g., payroll taxes) by specific deadlines to avoid penalties.