Description: Isocost v. Isoquant Graph. Each line segment is an isocost line representing one particular level of total input costs, denoted TC in the graph and C in the article's text. P L is the unit price of labor (w in the text) and P K is the unit price of physical capital (r in the text).
Description: An isocost show all combinations of factors that cost the same amount. Isocosts and isoquants can show the optimal combination of factors of production to produce the maximum output at minimum cost. Definition isoquant
Description: Isocost. In economics an isocost line shows all combinations of inputs which cost the same total amount. Although similar to the budget constraint in consumer theory, the use of the isocost line pertains to cost-minimization in production, as opposed to utility-maximization. For the two production inputs labour and capital, with fixed unit costs of ...
Description: Isocost. Isocost lines show combinations of productive inputs which cost the same amount. They are the same concept as budget restrictions when looking at consumer behaviour. Mathematically, they can be expressed as: rK + wL = C. Where r is the cost of capital and w is the cost of labour.
Description: An isocost line is a graph of combinations of labor and capital, or any other two factors of production, such that the total cost remains the same. An isocost line is the producers what a budget line is to a consumer. While a budget line shows a consumer’s maximum income, an isocost line shows the maximum amount which a firm is willing to ...
Description: An isocost line is a graphical representation of various combinations of two factors (labor and capital) which the firm can afford or purchase with a given amount of money or total outlay. It is an important tool for determining what combination of factor-inputs the firm will choose for production process.
Description: Isocost curve is the locus traced out by various combinations of L and K, each of which costs the producer the same amount of money (C ) Differentiating equation with respect to L, we have dK/dL = -w/r This gives the slope of the producer’s budget line (isocost curve). Iso cost line shows various combinations of labour and capital that the firm can buy for a given factor prices.
Description: Isocost line. The isocost line displays all the different combinations of inputs that can purchase for a given cost. Typically, we put the amount of capital on the y-axis and the amount of labour on the x-axis. The isocost line is very similar to the budget constraint.
Description: A curve showing the combinations of factor inputs that have constant market cost. If firms are acting as price-takers in factor markets, the isocost curve is a straight line, whose slope represents the relative prices of different factors' services. A profit-maximizing firm will minimize the cost of factors required to produce a given output, corresponding to the isoquant being tangential to ...
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