Consider a Firm's Isocost Line Where Labor Is Measured on the Horizontal

question 9

Multiple Choice

Consider a firm's isocost line where labor is measured on the horizontal axis and capital on the vertical axis.If everything else is unchanged,a fall in the price of labor would:

• A)increase the horizontal intercept of the isocost line.
• B)shift the isocost line outward away from the origin.
• C)shift the isocost line inward toward the origin.
• D)increase the vertical intercept of the isocost line.

Understand the implications of market dynamics on resource allocation and industry supply in the long run.

Recognize the transformative impact of competition on societal welfare through innovation and efficiency.

Understand the conditions for long-run equilibrium in purely competitive markets and the achievement of normal economic profits.

Recognize the allocation efficiency in pure competition where production occurs at the output level where P = MC.