In recent years, the use of mobile computing devices in production processes of many types has increased tremendously. New software applications have been created to solve business and engineering problems; at the same time, production of mobile devices has become much more efficient, allowing prices to fall drastically. Suppose a production process uses two inputs: labor (L) and mobile computing devices (K).
(a). Draw a series of isoquant maps in the diagrams provided showing how the development of these computer resources changed the production options available to many firms.
(b) On a separate diagram, draw a series of isocost curves showing how falling prices of computers changed firms’ options.
(c) Put your isoquants and isocosts together in another diagram to show how optimal employment of labor and computers has changed. There should be (clearly labeled) an original optimal point and a new optimal point. Pay special attention to correctly graphing the changed ratio of inputs which will result in the new optimal, also clearly label which isoquants and which isocosts correspond to each optimal.

  • CreatedAugust 05, 2013
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