Suppose the isoquant represents the production of 120 pencils. What will happen to the isocost and isoquant if the following situations occur? a. Labor becomes more costly. b. The budget for production is allowed to increase in order to increase the production of pencils, while keeping the price of inputs the same. c. The demand for pencils suddenly increase, thus increasing its price.

Microeconomics
13th Edition
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter21: International Finance
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Suppose the isoquant represents the production of 120 pencils. What will happen to the isocost and isoquant if the following situations occur?

a. Labor becomes more costly.

b. The budget for production is allowed to increase in order to increase the production of pencils, while keeping the price of inputs the same.

c. The demand for pencils suddenly increase, thus increasing its price.

10
9
8
6
4
3
1
1
3
4
6
10
Labor
2.
5
2.
Capital
Transcribed Image Text:10 9 8 6 4 3 1 1 3 4 6 10 Labor 2. 5 2. Capital
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