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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.
TAKE A HYPOTHETICAL ECOMOMY AND CONSTRUCT THE CONSUMPTION SCHUDEL CONTAIN 10 PAIR OF HYPOTHETICAL VALUE OF AGGERGET INCOME AND CONSUMPTOIN
pls i want to estimate a cost function for the data i coollected from a research on cassava production .i have the cost for each input and output but do not how to go abo0ut it.
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