A Steeply Sloped Isoprofit Curve,with Wages on the Vertical Axis

question 39

Multiple Choice

A steeply sloped isoprofit curve,with wages on the vertical axis and risk of injury on the horizontal axis,indicates that

• A) injury levels can be reduced easily and inexpensively.
• B) it would be very expensive to increase safety in the workplace.
• C) the industry is very competitive.
• D) the industry will pay only small compensating differentials.

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Definitions:

Decreasing-cost Industry

An industry where the cost per unit of output decreases as the scale of production increases.

Long-run Equilibrium Price

The price level at which the quantity supplied equals the quantity demanded, achieved over a period where all inputs can be varied by producers.

Increase in Demand

A situation where there is a rise in consumers' desire to purchase goods or services, leading to higher quantity demanded at every price level.

Constant Costs

Occur when the cost of producing an additional unit of a good does not change as the scale of production increases or decreases.