Cost minimizing input choice, Microeconomics

Assignment Help:

The Cost Minimizing Input Choice

- Assumptions

  • Two Inputs: Labor (L) & capital (K)
  • Price of labor: wage rate (w)
  • The capital price

- R = depreciation rate + interest rate

- Question

  • If capital was rented, would it change the value of r?

* 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:

  • K = C/r - (w/r)L
  • Slope of the Isocost:

                  1222_isocost.png

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.


Related Discussions:- Cost minimizing input choice

Why does a monopoly have no supply curve, Why does a monopoly have no suppl...

Why does a monopoly have no supply curve?  A supply curve is a curve that shows the quantity supplied at dissimilar prices, as a monopoly sets the price and the quantity togeth

National income, National income: The national income or product ...

National income: The national income or product or expenditure provides a measure of total value at factor cost of final goods and services, which are available either fo

Market structures, discuss the implications of various market structures(co...

discuss the implications of various market structures(competitive and non-competitive) for price determination

PROPERTIES OF INDIFFERENCE CURVES, #question.PROPERTIES OF INDIFFERENCE CUR...

#question.PROPERTIES OF INDIFFERENCE CURVES WITH TABLE AND DIAGRAM.

Supply and demand, Suppose scientists discover that eating soybeans prevent...

Suppose scientists discover that eating soybeans prevents cancer and heart disease

All chapter, sir explain me about all things of microeconomics

sir explain me about all things of microeconomics

Effect of gasoline tax with rebate, Effect of Gasoline Tax with Rebate ...

Effect of Gasoline Tax with Rebate Assume -Income = $9,000 - Price of gasoline = $1

Macroeconomics, Rework figure 1 assuming a closed economy

Rework figure 1 assuming a closed economy

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd