Suppose that a firm produces 300,000 units a year and sells them all for $3 each. The explicit costs of production are $500,000 and the implicit costs of production are $200,000. The firm earns an accounting profit of:

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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.