Input substitution when the input price change, Microeconomics

Input Substitution When the Input Price Change

 Isoquants and Isocosts and Production Function

2278_production function.png

1616_input substitution.png

The minimum cost combination can be written as:

1726_input substitution1.png
- Minimum cost for a given output will occur when each dollar of input added to the production process will add an equivalent amount of output.

* Question

- If w = $10, r = $2, and MPL = MPK, which input would producer use more of?  Why? 

Posted Date: 10/12/2012 3:00:57 AM | Location : United States

Related Discussions:- Input substitution when the input price change, Assignment Help, Ask Question on Input substitution when the input price change, Get Answer, Expert's Help, Input substitution when the input price change Discussions

Write discussion on Input substitution when the input price change
Your posts are moderated
Related Questions

Think of the Golden Ball game. Now player 1 is money-minded and jealous, and player 2 is very good-hearted, so the payoff matrix is follows:                                Playe

You just opened a flower shop and are trying to understand pricing issues. You were told that elasticities are very important in determining prices and what products to supply, so

Formulate the consumption function for Mauritius using appropriate theories and suggest values for the coefficients of the independent variables based on theories. Given it’s a tim

I don''t really understand how scitovsky contour is formed.

Diffrence between price and Income elasticity of demand: Own price elasticity of demand is the degree of responsiveness of the quantity demanded of a commodity to a change in

Lending Operations of World Bank: Resources of the Bank consist of the capital and borrowings. The capital of the bank is contributed by its 184 member-countries. Besides,

Slope of an Iso-quant: Since along an iso-quant the level of output remains the same, if θL units of θL are substituted for K units of K, the increase in output due to θ L