The isocost line is an important component when analysing producer’s behaviour. The isocost line illustrates all the possible combinations of two factors that can be used at given costs and for a given producer’s budget. In simple words, an isocost line represents a combination of inputs which all cost the same amount.

Now suppose that a producer has a total budget of Rs 120 and and for producing a certain level of output, he has to spend this amount on 2 factors A and B. Price of factors A and B are Rs 15 and Rs. 10 respectively.