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The Cost Minimizing Input Choice
- Assumptions
- R = depreciation rate + interest rate
- Question
* The Isocost Line
- C = wL + rK
- Isocost: A line which shows all the combinations of L & K which can be purchased for same cost
- Rewriting C as linear:
is the ratio of wage rate to rental cost of capital.
* This shows the rate at which capital can be substituted for labor with no change in cost.
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objestive of williamson modle
cars:0,2,4,6,8 tow truck:30,27,21,12,0
Ask question # how do you formulate a demand and supply equations when you a table of prices, quantity demanded and supplied?
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