Consider the following information about the input choices and prices, produci the same output in time 0 and time 1. Can you tell if the firm's choices are consistent with cost minimization or not? Demonstrate your answer. X1 X2 W1 W2 Time 0 10 1 4 Time 1 8 2

Consider the following information about the input choices and prices, produci the same output in time 0 and time 1. Can you tell if the firm's choices are consistent with cost minimization or not? Demonstrate your answer. X1 X2 W1 W2 Time 0 10 1 4 Time 1 8 2

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 25RQ: In choosing a production technology, how will firms react if one input becomes relatively more...

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

Consider the following information about the input choices and prices, producing
the same output in time 0 and time 1. Can you tell if the firm's choices are consistent with
cost minimization or not? Demonstrate your answer.
X1
X2
W1
W2
Time 0
10
1
4
Time 1
8
6.

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