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3. The following figure shows a firm’s isoquant for producing 2,000 units of output
and four isocost curves. Labor and capital each cost $50 per unit. 500 Units of capital
03
ca
(3 200 100 D 1 00 200 300 40 0 500 Units of labor At point A, the MR‘IIS‘ is (less than, greater than, equal to)
the input price ratio, wfr. The total cost of producing 2,000 units of output
with input combination A is $ By moving from A to B, the firm (increases, decreases) labor usage and (increases, decreases)
capital usage. At point B the MRTS is (greater than, less than, equal to) the input price ratio, w/r. The movement from A to B
(increased, decreased) total cost by 311 At Point D the firm (minimizes, maximizes) the cost of producing 2,000 units of output. The MRTS is (greater than, less than, equal to) the input price ratio, w/r. The optimal input combination is units of labor and
units of capital. At this combination, the total cost of producing 2,000 units is is At point E, the MP per dollar spent on is less than the MP per dollar spent on . The total cost of producing 2,000 units of output with input combination E is $

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a. Less than (as the isoquant is flatter than the isocost line), $20000 b. decreases labour... View the full answer

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