The equation of the production function for calculators is q = 5KL + 30L, where q is total output, K is capital and L is labour. If a firm that produces calculators wishes to produce 650 units of output and its capital stock is fixed in the short run at 20 units, how many units of labour should it hire? Five units of labour should be hired. Ten units of labour should be hired. 3. Twenty units of labour should be hired.

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Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.