a) Find the formula for the firm's isoquants, and sketch the isoquant for y = 16 in a diagram. D) Compute the firm's optimal input combination (x(16),x(16)), and illustrate it in your diagram in a). Explain your steps. What are the firm's costs of producing 16 units? =) Find the firm's cost function C(y). Explain what you are doing.

a) Find the formula for the firm's isoquants, and sketch the isoquant for y = 16 in a diagram. D) Compute the firm's optimal input combination (x(16),x(16)), and illustrate it in your diagram in a). Explain your steps. What are the firm's costs of producing 16 units? =) Find the firm's cost function C(y). Explain what you are doing.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

A company chooses the two inputs *1
duce its output y.
f(x1, x₂)
y =
and 2 to pro-
The production function is given as
1/2 1/2, and input prices are ₁ = 80 and
4x1x2
=
w220. The firm also has fixed costs of F = 100.
a) Find the formula for the firm's isoquants, and sketch the
isoquant for y = 16 in a diagram.
b) Compute the firm's optimal input combination
(x(16),x(16)), and illustrate it in your diagram in
a). Explain your steps. What are the firm's costs of
producing 16 units?
c) Find the firm's cost function C(y). Explain what you are
doing.

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M1