Consider a production function of two inputs, labor and capital given by Q=LK. Let w =5 and r = 1, where w is the price per unit of labor and r is the price per unit of capital. a) Suppose that the firm is required to produce Q units of output. Show how the cost-minimizing quantity of labor depends on the quantity Q? b) If the firm is operating in the short run, with K fixed at 10 units, calculate the short-run total cost of producing 100 units of output?

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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.