Suppose w 20 and r 30 The isocost line for the firm in this

Suppose w= $20 and r= $30. The isocost line for the firm in this industry is equal to what?

Solution

an iso cost line shows the combinations of inputs whic cost the same total amount

Equation of isocost line is rK + wL = C

w = wage rate labour

r = rental rate of capital

K = amount of capital used

L = amount of Labour Used

C = total cost

therefore the equation of iso cost line in th e above problem will be 30K +20L = C