Refer to the information provided in Figure 7.9 below to answer the questions that follow. Figure 7.9
-Refer to Figure 7.9. If the price of capital is $20, then along isocost line AB total cost is
A) $300.
B) $1,200.
C) $2,400.
D) indeterminate from this information, as the price of labor is not given.

Question

Refer to the information provided in Figure 7.9 below to answer the questions that follow.  Figure 7.9
-Refer to Figure 7.9. If the price of capital is $20, then along isocost line AB total cost is
A) $300. 
B) $1,200. 
C) $2,400. 
D) indeterminate from this information, as the price of labor is not given.

Quizplus · Accepted Answer

Along isocost line AB, the total cost is equal to the product of the price of capital (20) and the quantity of capital used (60) plus the product of the price of labor (10) and the quantity of labor used (60). Therefore, the total cost is: 
TC = (20 x 60) + (10 x 60) = $1,200.

Refer to the Information Provided in Figure 7