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The Cost Minimizing Input Choice
- Assumptions
- R = depreciation rate + interest rate
- Question
* The Isocost Line
- C = wL + rK
- Isocost: A line which shows all the combinations of L & K which can be purchased for same cost
- Rewriting C as linear:
is the ratio of wage rate to rental cost of capital.
* This shows the rate at which capital can be substituted for labor with no change in cost.
Elasticity- a) The price of good X goes up by 2.75%, the quantity demanded of good Y goes from 10,500 units to 25,000. What is the Exy? What does that number mean? What is th
suppose you have a coffee shop. list of fixed input and variable input for operating the shop
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