isocost curve

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A curve showing the combinations of factor inputs that have constant market cost. If firms are acting as price-takers in factor markets, the isocost curve is a straight line, whose slope represents the relative prices of different factors' services. A profit-maximizing firm will minimize the cost of factors required to produce a given output, corresponding to the isoquant being tangential to the lowest isocost curve.

Subjects: Economics.

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