Section one-theory A: Key concepts 1. What is the difference between production in the short- and long-run? What does it mean for two inputs to be perfect substitutes? 2. B: Theory: Cost Minimisation (isocost-lines and production) Note: In the class, I will put capital on the 'Y' axis and labour on the 'X' axis. Obviously, the choice doesn't matter mathematically, but if you want your graph to look like mine, do the same! 3. The wage rate is £10 and the capital rate is £20. If a firm was spending £c, show what combinations of labour and capital are possible in an equation. Represent the combinations possible if the firm spent £200, £400, or £600 in a suitably labelled graph.
Section one-theory A: Key concepts 1. What is the difference between production in the short- and long-run? What does it mean for two inputs to be perfect substitutes? 2. B: Theory: Cost Minimisation (isocost-lines and production) Note: In the class, I will put capital on the 'Y' axis and labour on the 'X' axis. Obviously, the choice doesn't matter mathematically, but if you want your graph to look like mine, do the same! 3. The wage rate is £10 and the capital rate is £20. If a firm was spending £c, show what combinations of labour and capital are possible in an equation. Represent the combinations possible if the firm spent £200, £400, or £600 in a suitably labelled graph.
Chapter8: Production And Costs
Section: Chapter Questions
Problem 13QP
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