Figure 7.13
-Refer to Figure 7.13.The lines shown in the diagram are isocost lines.If the price of labour is $50 per unit, then along the isocost AF, the total cost
A)is $500.
B)is $750.
C)is $1250.
D)cannot be determined without the price of capital.

Question

Figure 7.13 
-Refer to Figure 7.13.The lines shown in the diagram are isocost lines.If the price of labour is $50 per unit, then along the isocost AF, the total cost
A)is $500. 
B)is $750. 
C)is $1250. 
D)cannot be determined without the price of capital.

Quizplus · Accepted Answer

The isocost line AF represents all combinations of labor and capital that cost $1250. Since the price of labor is $50 per unit, the total cost of labor along AF is $50 * 25 = $1250.

Figure 7.13 -Refer to Figure 7.13.The Lines Shown in the Diagram Are