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(a) Explain the intuition for convex isoquant curves. (b) Suppose the firm is currently at point A. Making referer to the figure, show that, with respect to A, the firm can produce more output with the same cost or spend less i order to produce the same output level. (c) What is value of marginal rate of technical substitution (MRTS) when the firm chooses an optimal input mix?

(a) Explain the intuition for convex isoquant curves. (b) Suppose the firm is currently at point A. Making referer to the figure, show that, with respect to A, the firm can produce more output with the same cost or spend less i order to produce the same output level. (c) What is value of marginal rate of technical substitution (MRTS) when the firm chooses an optimal input mix?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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15.9. Input mix. Figure 5.15 illustrates a firm's input mix choice. 5.3. OUTPUT LEVEL AND PRICE C/r K с B 91 92 93 C/w L FIGURE 5.15 Optimum input mix (top) and cost minimization (bottom) 208 (a) Explain the intuition for convex isoquant curves. (b) Suppose the firm is currently at point A. Making reference to the figure, show that, with respect to A, the firm can produce more output with the same cost or spend less in order to produce the same output level. (c) What is value of marginal rate of technical substitution (MRTS) when the firm chooses an optimal input mix?
Transcribed Image Text:15.9. Input mix. Figure 5.15 illustrates a firm's input mix choice. 5.3. OUTPUT LEVEL AND PRICE C/r K с B 91 92 93 C/w L FIGURE 5.15 Optimum input mix (top) and cost minimization (bottom) 208 (a) Explain the intuition for convex isoquant curves. (b) Suppose the firm is currently at point A. Making reference to the figure, show that, with respect to A, the firm can produce more output with the same cost or spend less in order to produce the same output level. (c) What is value of marginal rate of technical substitution (MRTS) when the firm chooses an optimal input mix?
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