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Unformatted text preview: The Initial Total Cost = The Minimized Total Cost = more on other side… 4 4.4 6 5 3550 F10 Quiz 6 Last Name: First Name: 2. (5 point) Peggy’s flooring store currently uses 10 units of capital and 50 units of labor. With this input mix in the short run, the MP K = 36 and the MP L =20 and she is producing a total 600 units of output per day. The price of capital is $18 per hour and the price of labor is $6 per hour. Show this situation in an isoquant-isocost diagram. a. Explain, and show in the diagram above, how Peggy can produce the same output at a lower total cost. (minimizing TC given Q) b. Explain, and show in the diagram above, how Peggy can produce more output at the same total cost. (maximizing Q given TC)...
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This note was uploaded on 03/14/2012 for the course ECON 2243 taught by Professor Henryfors during the Spring '12 term at Abant İzzet Baysal University.
- Spring '12