Q₂ A production function is given by q = 500L + 700K. The price of capital is $120 and the price of labor is $100. If the firm wants to produce 1,400 units of output, how many units of labor should it use? Your Answer: Answer

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Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.