A farmer uses three inputs to produce vegetables: land, capital, and labor. The production function for the
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a) In the short run the amount of land is fixed. Suppose the prices of capital and labor both increase by 5 percent. What happens to the cost-minimizing quantities of labor and capital for a given output level? Remember that there are three inputs, one of which is fixed.
b) Suppose only the cost of labor goes up by 5 percent. What happens to the cost-minimizing quantity of labor and capital in the short run?
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a The amount of land used in production is fixed in th...View the full answer
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