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How the condition relates to the profit maximization goal

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Reference no: EM132207692

Question: A. Explain and show (using 2 diagrams) why the condition MRTS = W/R is efficient.

B. Explain how this condition relates to the profit maximization goal of the firm.

C. Is it possible that a firm is operating at MRTS = W/R, but earning, an economic loss? Why or not?

D. Suppose a firm can hire all the labor it wants at a wage = w, but for capital, the price (r) applies up to a certain level, and then price of capital falls to (1/2)r beyond that point. Show this isocost.

Reference no: EM132207692

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