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:

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

Functions of commercial bank, what is the functions of commercial bank ..

what is the functions of commercial bank ..

What are subsidies, What are subsidies? Almost in all market systems, ...

What are subsidies? Almost in all market systems, government plays its role to stabilize the price of certain commodities, which are of public interest like medicines and edib

Economic theory, Much of undergraduate macroeconomic theory is discussed on...

Much of undergraduate macroeconomic theory is discussed on the assumption that, in the short run, the expectations of economic agents about the future values of macroeconomic varia

#title., comprehensively discuss the market structure in the South African ...

comprehensively discuss the market structure in the South African mobile telecommunication industry

Brief answer, what is ''Prisoner''s Dilemma'',of non-cooperative game?estio...

what is ''Prisoner''s Dilemma'',of non-cooperative game?estion..

Bains limit pricing theory, Plss explain bains limit pricing theory.

Plss explain bains limit pricing theory.

What is endogenous growth theory, Problem 1: Any development strategy s...

Problem 1: Any development strategy should put people first; indeed, its very effectiveness should be measured in terms of how it impacts the poor. (a) Describe the link bet

Structural unemployment, Structural Unemployment: This is unemploymen...

Structural Unemployment: This is unemployment resulting from changes in the pattern of demand for goods and services or changes in technology.These changes may in turn alter

Monopoly, what is multi-plant monopoly?

what is multi-plant monopoly?

Organization becoming too large to effectively manage, Economies of scale a...

Economies of scale are advantages obtained from a company becoming large and diseconomies of scale are additional costs inflicted because a firm has become very large. The causes

Write Your Message!

Name

Email id

Message

Verfication Code

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!

Submit Assignment

User Account

All Pages