### [solution] » A firm uses labor (L) and machines (K) to produce some output.  The cost of labor is \$40 per unit

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A firm uses labor (L) and machines (K) to produce some output.  The cost of labor is \$40 per unit and the cost of using a machine is \$10.

(a)  Derive an equation for the isocost line.

(b)  Draw an isocost line for this firm, showing combinations of labor and machines that have a total cost of \$400.  Label this line (C0 = \$400).  Draw another line (on the same graph) showing combinations that cost \$200.  Label this line (C1 = \$200).  Be sure to clearly identify the intercepts.

(c)  What is the slope of the isocost line C0 = \$400?  What is the slope of the isocost line C1 =\$200?

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##### [solution] » A firm uses labor (L) and machines (K) to produce some output.  The cost of labor is \$40 per unit.zip

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This paper was answered on 14-Oct-2020

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Oct 14, 2020

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