Respuesta :
Answer:
D. All the above are correct
Step-by-step explanation:
An isocost line will be shifted further away from the origin if the total cost increases, if the price of both inputs increases or there is an advance in technology.
An isocost line can be defined as the graphical representation of various combinations of two inputs factors (labor,L and capital, K) which the firm can afford or purchase with a given amount of money.
An isocost line can be expressed mathematically as:
C = w L + r K
Where,
C = cost of production
w = price of labor or wages
L = units of labor
r = price of capital or interest rate
K =units of capital
Isocost is used to determine what combination of factor inputs the firm will choose for production process.
An iso-cost line will be shifted further away from the origin'' All of the above are correct".
An iso-cost line will shift either because of a change in total outlay or a change in factor prices.
A change in total outlay will cause a parallel shift in the iso-cost line, as there will be no change in its slope, factor prices being constant.
An iso-cost line will be shifted further away from the origin if the total cost increases if the price of both inputs increases or there is an advance in technology.
An iso-cost line can be defined as the graphical representation of various combinations of two inputs factors (labor, L and capital, K) which the firm can afford or purchase with a given amount of money.
Each iso-cost curve represents a fixed level of costs and the isoquant represents a fixed level of output.
Therefore, tracing a line through these set of points represents what combination of labor and capital will be used for a fixed level of costs or output.
The points further away from the origin represent higher levels of costs or output. An iso-cost line can be expressed mathematically as:
[tex]C = w L + r K[/tex]
Where, C = cost of production
w = price of labor or wages
L = units of labor
r = price of capital or interest rate
K =units of capital
Iso-cost is used to determine what combination of factor inputs the firm will choose for the production process.
Hence, An iso-cost line will be shifted further away from the origin'' All of the above are correct".
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