6.15 : 等費用線 II

The slope of the isocost line represents the rate at which one input can be substituted for the other without changing the total cost of production.

Mathematically, the slope is given by the negative ratio of the wage rate to the rental rate of capital.

Consider a bakery with an isocost line. Here, the slope is -½, indicating that two units of labor can be substituted for one unit of capital to maintain the same overall expenditure.

The changes in the price of inputs can steepen or flatten the isocost line.

For example,  if the wage rate increases to $20 per hour while the rental rate of capital remains the same, the new isocost line would be steeper, with a slope of -1. This indicates labor has become relatively more expensive. Similarly, a decrease in wage rate to $5 per hour would result in a flatter isocost line with a slope of -¼,  indicating labor has become relatively cheaper.

On the other hand, changes in the firm's total budget will shift the isocost curve parallel to itself without changing its slope. An increase in budget shifts the line outward, while a decrease shifts it inward.