Answer on Microeconomics Question for JoJo
a) Draw a isocost line in a diagram (measure labour along the horizontal axis and capital along the vertical axis). What is the slope of the isocost line?
b) Find the various amounts of labour (L) necessary to produce the output level of 45 units, given, K=1, K=2, K=3, K=4, K=5, K=6, and draw the resulting isoquant in the same diagram as in part (a).
c) What is the cost minimising input combination that the firm should choose?
Briefly explain the condition for this optimum.
d) Suppose that the production process is using 6 units of capital. What should the firm do to minimize costs? Explain your answer in terms of the slopes.
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