Iso-Cost Line/ Outlay Line Iso-Cost Line: Iso-cost line represents the different combinations of the two inputs which the firm can purchase at the given prices and the given amount of the total outlay which a firm wants to spend. It is also known as price-line, outlay-line, factor cost line, or budget-line. Suppose the producer has total outlay Rs. 15 to spend on two inputs factor X and factor Y and the price of factor X is Rs 3 per unit and the price of factor Y is Rs 1 per unit. With Rs.15, he can purchase 5 units of factor X [=OF] or 15 units of factor Y[OA]. By joining points A, B, C, D, E, and F, we get the Iso-cost line. It is also called the Price line, Outlay line, or Budget line. This line shows all possible combinations of two factor X and factor Y which the producer can purchase with the given outlay. A producer can purchase any of the combinations of two factors, falling on the line on AF, such as B, C, D, E. A combination like H is unattainable as it li...
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