Answered: Assume that the inputs are the perfect…

Assume that the inputs are the perfect complement, if the price of one input (i.e wage rate) has increased, could we minimise cost by using less labour and more capital?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter7: Proudction Costs

Section: Chapter Questions

Problem 10SQ

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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.

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Assume that the inputs are the perfect complement, if the price of one input (i.e wage rate) has increased, could we minimise cost by using less labour and more capital?

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