QUESTION 3 Two inputs, labour (L) and capital (K) are used to produce a given output. The Marginal Product of Lis equal to K: the Marginal Product of K is equal to L The hourly wage is w = 1; the interest rate is r= 2. Which of the following mixes of inputs could be cost minimizing for some level of production? O a. (K-0, L-100) Ob.(K=100, L-200) OC (K-200, L=100) Od.(K-1, L=3) O . (K-0, L-3)

QUESTION 3 Two inputs, labour (L) and capital (K) are used to produce a given output. The Marginal Product of Lis equal to K: the Marginal Product of K is equal to L The hourly wage is w = 1; the interest rate is r= 2. Which of the following mixes of inputs could be cost minimizing for some level of production? O a. (K-0, L-100) Ob.(K=100, L-200) OC (K-200, L=100) Od.(K-1, L=3) O . (K-0, L-3)

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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.

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