Upon opening a printing and copy shop, a firm budgets $30,000 for copy machines and labor. If the price of labor is $30 per hour, what is the horizontal intercept of the isocost line when labor is measured on the horizontal axis?
A) 75 hours
B) 1,000 hours
C) 90,000 hours
D) 300,000 hours
E) It is impossible to tell from the information given.

Question

Quizplus · Accepted Answer

The isocost line can be represented by the equation $30L + M = 30,000$, where $L$ is the number of hours of labor and $M$ is the cost of the copy machines. If labor is measured on the horizontal axis, then $M$ is on the vertical axis. To find the horizontal intercept, we set $M=0$ and solve for $L$: $30L + 0 = 30,000 \Rightarrow L = 1,000$. Therefore, the horizontal intercept is 1,000 hours of labor, which corresponds to spending the entire budget on labor and not purchasing any copy machines.

Upon Opening a Printing and Copy Shop, a Firm Budgets