Refer to the information provided in Figure 7.10 below to answer the question(s) that follow. Figure 7.10
-Refer to Figure 7.10. If this firm's cost of capital is $20 per unit and its cost of labor is $10 per unit, the isocost line represents a total cost of
A) $2,000.
B) $3,000.
C) $4,000.
D) $8,000.

Question

Refer to the information provided in Figure 7.10 below to answer the question(s) that follow.  Figure 7.10
-Refer to Figure 7.10. If this firm's cost of capital is $20 per unit and its cost of labor is $10 per unit, the isocost line represents a total cost of
A) $2,000. 
B) $3,000. 
C) $4,000. 
D) $8,000.

Quizplus · Accepted Answer

The isocost line represents a total cost of $2,000 because the cost of capital is $20 per unit and the cost of labor is $10 per unit. The isocost line is the line that connects all the points that represent the same total cost. The total cost is equal to the cost of capital multiplied by the number of units of capital plus the cost of labor multiplied by the number of units of labor. In this case, the total cost is equal to $20 * 100 + $10 * 100 = $2,000.

Refer to the Information Provided in Figure 7