# 0(L, K) = 50K2Lī, where K is capital and L is labour. The marginal products areMPL 5KLi, and MP 50-iLi.Assume that a haircut has the price, p, that the cost of purchasing labouris wi and the cost of purchasing capital is r. We will also assume that inthe short run that capital is held constant. What is the equation for a shortrun isoprofit line?

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15 views help_outlineImage Transcriptionclose0(L, K) = 50K2Lī, where K is capital and L is labour. The marginal products are MPL 5KLi, and MP 50-iLi. Assume that a haircut has the price, p, that the cost of purchasing labour is wi and the cost of purchasing capital is r. We will also assume that in the short run that capital is held constant. What is the equation for a short run isoprofit line? fullscreen
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Step 1

Production technologies or production function defines a relationship between the output and inputs. We are given the production function as follows.

Step 2

We are given the cost of purchasing capital=r

And, the cost of purchasing labor=w.

Thus, to hire L units of labor and K units of capital, the cost would be,

Step 3

Profit is defined as total revenue net of total costs. Now, we write the profit function (π) as per the given infor...

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