A firm has Rs. 1,000 to spend; factor X costs Rs. 10 and factor Y costs Rs. 20 per unit. If it spends the entire outlay on factor X alone, how many units of X can it buy?

1. The iso-cost line shows combinations of two factors affordable with a given outlay. 2. Spending the whole outlay on X gives units $= \frac{\text{outlay}}{\text{price of X}} = \frac{1000}{10}$. 3. So the firm can buy $100$ units of X. 4. Spending it all on Y would give $\frac{1000}{20} = 50$ units, so 50 is a trap; the answer for X is 100 units. _Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 3 Unit I "Theory of Production", p.23_