Question

In an iso cost map the iso cost lines are parallel to each other so there slopes are going to be equal since the slopes of a parallel lines are equal that means the ratio of capital is to labour is going to remain constant in an iso cost map then how do we find the equilibrium point attached is the equation of an iso cost line

Answer 1

K= Capital
L=Land

(0,K1)= Point at which an iso cost line cuts Y-Axis
(L1,0) = Point at which an iso cost line cuts X axis
M= Slope of an iso cost line
\
Slope of iso-cost line=-K1/L1=m

Therefore, equation of an iso cost line is
(K-K1)=m(L-L1)
How do we find the equilibrium point at which the isoquant would meet the iso cost line

Answer 2

yes the slope are the same...........but you should visualize the Isocost curves in 3D..Cost define by the curve are in the Z-axis....Check the attachment