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What is the marginal rate of technical substitution

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Reference no: EM132162109

Suppose a firm has the production function Q = 100L + 50K, and suppose that labor and capital have prices per unit of w = 20, r = 9. MPL = 100 and MPK = 50.

(a) Provide a graph illustrating three respresentative isocost lines, and the firm's isoquant associated with a quantity Q = 1000. Be sure to label all lines on your graph. What are the slopes of the isocost and isoquant lines? What is the marginal rate of technical substitution? What combination of L and K allow the firm to produce 1000 units of Q at the lowest possible cost?

Reference no: EM132162109

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