MilenaMath
Nov 5, 2012, 12:12 PM
A firm's production function is given by y(K,L) = min(K,L). Each unit of K and L costs 1 Euro.
a) For an output level of y show the cost-minimizing input choice in a graphic.
b) The price of K increases to 2 Euro per unit. How does this affect the choice of inputs? If you want to keep the output level of production constant by how much do the production costs increase?
a) For an output level of y show the cost-minimizing input choice in a graphic.
b) The price of K increases to 2 Euro per unit. How does this affect the choice of inputs? If you want to keep the output level of production constant by how much do the production costs increase?