The move from A to B shows that the effluent fee emphasizes the greater use of

# The move from a to b shows that the effluent fee

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The move from A to B shows that the effluent fee emphasizes the greater use of capital 3500 machine-hours and less production of wastewater 5000 gallons and pay only \$50,000 fee rather than \$100,000 if firm maintain at A. An effluent fee is a per-unit fee that the steel firm must pay for the effluent that goes into the river.

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32 of 43 Cost Minimization: The Expansion Path and Long-Run Costs The firm can hire labor L at w = \$10/hour and rent a unit of capital K for r = \$20/hour. Given these input costs, we have drawn three of the firm’s isocost lines. Each isocost line is given by the following equation: C = (\$10/hour)( L ) + (\$20/hour)( K ) The expansion path is a straight line with a slope equal to K / L = (50 25)/(100 50) = 1 2 expansion path Curve passing through points of tangency between a firm’s isocost lines and its isoquants. Represent a firm combinations of labor and capital to minimize costs at each output level.