Answered: Explain why a profit function π(K,L)…

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Economics

Explain why a profit function π(K,L) doesn't exist such that: The marginal benefit with respect to capital is 2KL

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Production And Costs

Section: Chapter Questions

Problem 11QP

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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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Explain why a profit function π(K,L) doesn't exist such that:

The marginal benefit with respect to capital is 2KL

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