The production function is y = min{x1 , x2} where x1 and x2 are the amounts of two inputs used. The price of x1 is $18 and the price of x2 is $20. a. If the firm wants to produce y = 120 units of output, how much is the (minimum) cost?  b. What is the firm’s total cost function c(y)? (

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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.