Homework Answers
w = 15 and r = 10
slope of isocost line is given by w/r or PL/PK
slope of isocost line = w/r
= 15/10
= 1.5
Equation of isocost curve
PLL + PKK = C
wL + rK = C
15L + 10K = 90
when L = 0 K = 9
when K = 0 L = 6
when L = 2 K = 6
Inpit combinations which lie on isocost curve are
(L , K) = (0,9) , (6, 0 ) , (2, 6)
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wants to find the cost-minimizing bundle of inputs to produce
10,000 tables. Assume K is on the y-axis in what
follows.
Write out the firm’s cost function.
Calculate the firm’s isocost equation.
What is the slope of the...
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