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Answer :
Final Answer:
The equation of the $1.5-million isocost line is b) 1.5m = 5L + 15K.
Explanation:
An isocost line represents all the combinations of labor (L) and capital (K) that a firm can purchase for a given total cost. In this case, the total cost is $1.5 million, which can be represented as 1.5m.
The cost of labor is $5 per labor hour (w), and the cost of capital is $15 per machine hour (r). To find the equation of the isocost line, you need to consider the total cost equation:
Total Cost (1.5m) = Cost of Labor (5L) + Cost of Capital (15K)
So, the equation is:
1.5m = 5L + 15K
This equation represents the $1.5-million isocost line, showing the various combinations of labor and capital that can be obtained for a total cost of $1.5 million.
Option B is answer.
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