Suppose that the price of labor ( ) is $10 and the price of capital ( ) is $20. What is the equation of the isocost line corresponding to a total cost of $100? A) P_L + 20P_K B) 100 = 10L + 20K C) 100 = 30(L+ D) 100 + 30 E) none of the above

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Quizplus · Accepted Answer

The equation of the isocost line is given by TC = PL + PK, where TC is total cost, PL is the price of labor, PK is the price of capital, and L and K are the quantities of labor and capital used, respectively. Substituting the given values, we get 100 = 10L + 20K. Therefore, the correct choice is B.

Suppose That the Price of Labor ( ) Is