If capital and labor are given how to find out isocost line
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(1) The technical relation between inputs and output (i.e., how outputs vary as inputs vary), and
(2) Factor prices (i.e., the price of labour or the wages, the price of capital or the interest rate and so on).
The long-run production function of a firm involving the usage of two factors, say, capital and labour is represented by equal-product curve or isoquant. This curve is also known as a producer’s indifference curve. An isoquant traces out the combinations of any two inputs which yield the same level of output.
(2) Factor prices (i.e., the price of labour or the wages, the price of capital or the interest rate and so on).
The long-run production function of a firm involving the usage of two factors, say, capital and labour is represented by equal-product curve or isoquant. This curve is also known as a producer’s indifference curve. An isoquant traces out the combinations of any two inputs which yield the same level of output.
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Explanation:
The isocost line is a firm's budget constraint when buying factors of production. To calculate the isocost line for a firm, begin with the total cost equation, TC = (W x L) + (r x K) and solve for K. W= wages, L =labor, r = the rent (what you pay for the use of capital), and K = capital.
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