isocost line:

Suppose the wage rate is $10 per hour (w = $10/hour) and the rental rate of capital is $10 per hour (r = $10/hour).

1. Write the equation for the isocost line for the firm.
2. Draw graph , with labor on the horizontal axis and capital on the vertical axis, showing the isocost line for C = $500. Indicate the horizontal and vertical intercepts along with the slope.
3. Suppose the price of capital increase to $20 per hour. Show what happens to the C=$500 isocost line, including changes to the intercepts and slope.

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