Initially a firm's wage is w = $24 and its rental cost of capital is r = $24. After its wage rate doubles, how do its isocost lines change? Let L represent labor and K capital. 1.) Using the line drawing tool, graph an isocost line at the original wage, when the wage is w = $24. Label this line '11. 2.) Using the line drawing tool, graph an isocost line at the new wage, when the wage doubles. Label this line '12. Carefully follow the instructions above, and only draw the required objects. K, Capital 20- 18- 16- 14- 12- 10- 8- 6- 4- 2- 0- 0 2 4 6 8 10 12 14 16 18 20 L, Labor
Initially a firm's wage is w = $24 and its rental cost of capital is r = $24. After its wage rate doubles, how do its isocost lines change? Let L represent labor and K capital. 1.) Using the line drawing tool, graph an isocost line at the original wage, when the wage is w = $24. Label this line '11. 2.) Using the line drawing tool, graph an isocost line at the new wage, when the wage doubles. Label this line '12. Carefully follow the instructions above, and only draw the required objects. K, Capital 20- 18- 16- 14- 12- 10- 8- 6- 4- 2- 0- 0 2 4 6 8 10 12 14 16 18 20 L, Labor
Chapter7: Proudction Costs
Section: Chapter Questions
Problem 10SQ
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