A firm uses two inputs, capital and labor, to produce output. Its production function exhibits a diminishing
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a) If the price of capital and labor services both increase by the same percentage amount (e.g., 20 percent), what will happen to the cost-minimizing input quantities for a given output level?
b) If the price of capital increases by 20 percent while the price of labor increases by 10 percent, what will happen to the cost-minimizing input quantities for a given output level?
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