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7. Suppose a firms production function is Q-min(L,K). (This means the level of O produced is the smaller of L and K) a. Graph some isoquants for this firm. b. Let w = 2, r= 1, and suppose the firms expenditures are C-12. What are the firms demands for L and K? What is the share of labor in the cost of output? c. Now let w rise to 3. What are the firms new demands for L and K? d. Now suppose instead that the production function is Q = min(L,2K), Draw some isoquants for this firm. e. Again, let w 2 and r 1, and suppose the firms expenditures are C 12. What are the firms demands for L and K? What is the share of labor in the cost of output? f. Now let w rise to 3. What are the firms new demands for L and K? g. Why does labor demand fall more in part f than in part c? (Hint: Use one of Marshalls Laws.)

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122+1 3 4 3 C > 123 +1k 2

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