Production of cloth requires two inputs: L workers and R tonnes of coal. The following diagram depicts the isocost associated with the production. You are also given that the wage cost is w= $20, the price of coal is p= $30 and the cost associated with the isocost is c= $180. Read the following statements and select the correct one.
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Question

Production of cloth requires two inputs: L workers and R tonnes of coal. The following diagram depicts the isocost associated with the production. You are also given that the wage cost is w= $20, the price of coal is p= $30 and the cost associated with the isocost is c= $180. Read the following statements and select the correct one.

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Accepted Answer

If the price of coal falls to p = $20, then the isocost will have the same horizontal axis intercept but a higher vertical axis intercept.

Answer

The isocost with cost c = $210 would be steeper than the one depicted.

Answer

If the wage cost increases to w = $30, then the isocost will have the same horizontal axis intercept but a higher vertical axis intercept.

Answer

The isocost with cost c = $210 would be a line shifted inwards with the same slope.

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Production of cloth requires two inputs: L workers and R tonnes of coal. The fol...

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