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C. Graph the isoquant for Qo = 20 and the isocost line. Label the tangency point E.

C. Graph the isoquant for Qo = 20 and the isocost line. Label the tangency point E.

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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I have graphed the isoquant line but I can’t figure out how to graph the isocost line? Could you verify my math and show the isoquant and isocost line graphed please?
3. Isocost and Isoquant Consider the production function: - The prices of inputs L and K are: The firm's target level of output is: Q(L, K) = LK r = 5 w = 4 Qo = 20 calculate the minimum achievable total cost (Cmin) and the cost-minimizing (L*, K*) combination. Use the tangency condition: MRTSKL = W/r. (Socost line C wL trk QLK - 2o → 20-K=O 40 Cmin = TL 4L+ 5 K = Co 4.L= 20 L* = =MRTS KL = mPL -AK 4 A L mpK K* = c* mine wĽ trk L.k= 20 R= 4 te the isocost equation for the cost-minimizing isocost line in slope-intercept form: K = 등 - L C. Graph the isoquant for Qo = 20 and the isocost line. Label the tangency point E. K a 4. 5 4 10 Qo= 20 13 14 1o r 12 0: 400
Transcribed Image Text:3. Isocost and Isoquant Consider the production function: - The prices of inputs L and K are: The firm's target level of output is: Q(L, K) = LK r = 5 w = 4 Qo = 20 calculate the minimum achievable total cost (Cmin) and the cost-minimizing (L*, K*) combination. Use the tangency condition: MRTSKL = W/r. (Socost line C wL trk QLK - 2o → 20-K=O 40 Cmin = TL 4L+ 5 K = Co 4.L= 20 L* = =MRTS KL = mPL -AK 4 A L mpK K* = c* mine wĽ trk L.k= 20 R= 4 te the isocost equation for the cost-minimizing isocost line in slope-intercept form: K = 등 - L C. Graph the isoquant for Qo = 20 and the isocost line. Label the tangency point E. K a 4. 5 4 10 Qo= 20 13 14 1o r 12 0: 400
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