The price of capital is $50 per unit. Use the accompanying figure, which shows an isocost curve, to answer the questions that follow:

a. The equation for the isocost curve shown in the figure is K = __________. The price of labor is $__________ per unit. The total cost associated with this isocost curve is $ __________.b. Input combination A is__________ units of labor and __________units of capital. The total cost of input combination A is $ __________. Verify that point A satisfies the isocost equation in part a.c. For the input prices used in parts a and b, construct the isocost curve for input combinations costing $4,500. For the $4,500 isocost curve, the capital intercept is __________and the labor intercept is __________. The equation of the isocost curve is K = __________. If 40 units of labor are employed, then __________units of capital can be employed for a total cost of $4,500.

Transcribed Image Text:

100 50 A 50 100 150 Labor (L) Capital (K)