The Slope of an Isoquant Is Equal to the Ratio

question 275

True/False

The slope of an isoquant is equal to the ratio of the price of the input on the horizontal axis divided by the price of the input on the vertical axis, multiplied by -1.

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Definitions:

Wage Rate

The standard amount of pay given to an employee for services rendered, typically expressed on a per hour basis.

Labor Supplied

Labor supplied refers to the total hours that workers are willing and able to work at a given wage rate.

Income Effects

Changes in consumers' purchasing power and consumption patterns resulting from changes in their income.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute more expensive items with cheaper alternatives.