Let a Firm Use Labor (L) and Capital (K) as Its

question 29

Multiple Choice

Let a firm use labor (L) and capital (K) as its only inputs to produce an output, Q. The cost of labor is w = $5 per labor hour and the cost of capital is r = $15 per machine hour. What is the equation of the $1.5-million isocost line?

• A) 1.5m = L + K.
• B) 1.5m = 5L + 15K.
• C) 1.5m = (5L)(15K).
• D) 1.5m = (5L + 15K)Q.

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