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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.
Suppose a banking system with the following balance sheet has no excess reserves. Assume that banks will make loans in the full amount of any excess reserves that they acquire and
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provide 3 examples of 1210 billionares in the world face scarcity
This is also known as sales force Opinion Method. In this method instead of consumers the opinion of the salesmen is sought. It is sometimes referred as the grassroots approach as
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