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Suppose that a firm is operating at a point of its expansion path where MRTSL,K< pL/pK...

Suppose that a firm is operating at a point of its expansion path where MRTSL,K< pL/pK . Explain how this firm can increase its output without changing its total expenditure on inputs. Use this to give an additional argument for why a firm operating off its expansion path would want to more toward its expansion path.

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Answer #1

MRT SLK ( 1 MRTS - /es. - in Ela - Along the expansion path, MRTS, K² . This leads to cast- minimizing combination and maximi

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