Question: In Figure 8 4b assume that the firm is currently producing
In Figure 8.4b, assume that the firm is currently producing six units of output at point B on isoquant IQ6. Suppose now that the firm plans to expand output to nine units by hiring more workers while continuing to use K2 units of capital (capital is assumed to be a fixed input in the short run). Identify the combination of workers and capital that will be used. Is the total cost of producing nine units of output in this way greater than, less than, or the same as the cost at point C? Support your answer by showing what has happened using LAC and SAC curves.
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