An isocost line Question 7 options: 1) represents the combinations of w and K that cost the firm the same amount of money. 2) represents the combinations of K and L that cost the firm the same amount of money. 3) has a convex shape. 4) represents the combinations of r and w that cost the firm the same amount of money.

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Puppy

Mathematics

14 July, 22:19

An isocost line Question 7 options: 1) represents the combinations of w and K that cost the firm the same amount of money. 2) represents the combinations of K and L that cost the firm the same amount of money. 3) has a convex shape. 4) represents the combinations of r and w that cost the firm the same amount of money.

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Ruth Choi · Answer 1

represents the combinations of K and L that cost the firm the same amount of money.

Step-by-step explanation:

Isocost is a graph representing factor inputs (labour, capital); which costs firm the same level of total production expenditure.

The curve is analogous to consumer's budget line - product combinations costing same to consumers. So, it is likely a straight line downward sloping curve also. Such because : factors are inversely related, given same total cost; and the slope is constant = price ratios of the two factor inputs.