BUSINESS: Isocost Lines An isocost line (iso means “same”) shows the different combinations of labor and capital (the value of factory buildings, machinery, and so on) a company may buy for the same total cost. An isocost line has equation
wL + rK = C for L ≥ 0, K ≥ 0 where L is the units of labor costing w dollars per unit, K is the units of capital purchased at r dollars per unit, and C is the total cost. Since both L and K must be non-negative, an isocost line is a line segment in just the first quadrant.
a. Write the equation of the isocost line with w = 10, r = 5, C = 1000, and graph it in the first quadrant.
b. Verify that the following (L, K) pairs all have the same total cost. (100, 0), (75, 50), (20, 160), (0, 200)
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