Class Notes - 10-19-07

Class Notes - 10-19-07 - 4 Slope of the isocost(see notes...

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Microeconomics – Class Notes – 10/19/07 D. Isocosts All combinations of K and L on the isocost have the same cost to the firm 1. T.C = (r * K) + (w * L) r Interest Rate (Product of Capital ) K Quantity of Capital w Product of Labor L Quantity of Labor Isocosts are linear and do have intercepts Isoquants are curved and asymptotic with the x- and y-axes (no intercepts)
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Unformatted text preview: 4. Slope of the isocost? (see notes in binder) E. Finding the Lease Cost Method of Production (See binder) At Cost minimization: o The productivity from the last dollar spent on Labor (L) is equal to the productivity from last dollar spent on Capital (K). o If we the cost minimization rule is not satisfied, then we need to change our allocation of inputs....
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