Suppose isoquant curves are smooth and bend in towards the origin and the cost minimization point is determined by the tangent of the isocost lines and the isoquant. Except all the other options characterize the cost minimization input bundle. (If a condition characterizes the cost minimization input bundle, the condition holds only at the cost minimization input bundle.) O MP/w - MP/r O MRTS - MP /MPK O MRTS - w/r O MP/MP - w/lt

Suppose isoquant curves are smooth and bend in towards the origin and the cost minimization point is determined by the tangent of the isocost lines and the isoquant. Except all the other options characterize the cost minimization input bundle. (If a condition characterizes the cost minimization input bundle, the condition holds only at the cost minimization input bundle.) O MP/w - MP/r O MRTS - MP /MPK O MRTS - w/r O MP/MP - w/lt

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis

Section: Chapter Questions

Problem 7TY

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Both capital and labor are variable inputs. Suppose the wage rate of labor is 16 (per hour) and the rental price of capital is 20 (per hour). The downward sloping smooth curves that bend in towards the origin are a firm's isoquants. The downward sloping straight lines are isocost lines. If the ferm plans to produce 20 units of output lper hour), its minimized cost is Capital slope=-0.8 (6,5.5) (4,5) (2,3) q=30 q=20 q=10 Labor O 180 O 160 O 164 O 122
please analyze the behavior of cost function and interpret the constant term in the expression of C(q)
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in part b, how do we know that is the cost function? where are those variables coming from? thx
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