The two lines to the right are called isocost lines because each one shows all possible combinations of capital and labor which cost the same. They work just like budget lines drawn for consumers. Rk is the rental rate for capital and W is the wage paid to workers.

    The lower isocost line shows all possible combinations which cost the firm $5,000 per week, while the higher isocost line is all combinations which cost $7,000. The slope of these lines is the ratio of the wage rate, W to the rental rate on capital, Rk.

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