Rental rate of capital coupled with no change in wage rate

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Reference no: EM13861810

Explain, using the isoquant-isocost diagram, why a rise in the rental rate of capital coupled with no change in the wage rate will lead to a rise in the price of the capital-intensive good relative to the price of the labor-intensive good.

Note: You do not need to draw a graph; just explain what happens on a isoquant-isocost framework.

Reference no: EM13861810

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