Consider, for example, a case in which L (Labour) = €10 per labour hour, K (Capital) = €20 per capital hour, and the budget = €200 an hour. Then the Isocost line is described by the equation:

Question

Quizplus · Accepted Answer

The isocost line equation is derived from the budget constraint: 200 = 20K + 10L. Rearranging gives K = 200/20 - (10/20)L, which simplifies to K = 10 - 0.5L. All options represent the same isocost line.

Consider, for Example, a Case in Which L (Labour) =