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19 November, 15:41

An isocost line Question 7 options: 1) represents the combinations of w and K that cost the firm the same amount of money. 2) represents the combinations of K and L that cost the firm the same amount of money. 3) has a convex shape. 4) represents the combinations of r and w that cost the firm the same amount of money.

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  1. 19 November, 19:31
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    represents the combinations of K and L that cost the firm the same amount of money.

    Step-by-step explanation:

    Isocost is a graph representing factor inputs (labour, capital); which costs firm the same level of total production expenditure.

    The curve is analogous to consumer's budget line - product combinations costing same to consumers. So, it is likely a straight line downward sloping curve also. Such because : factors are inversely related, given same total cost; and the slope is constant = price ratios of the two factor inputs.
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