Consider the production and cost information depicted below:

a. Suppose that capital can be hired for $24 per hour. Label each of the isocost lines with the appropriate total expenditure for the firm.
b. Suppose that labor can be hired for $36 per hour. Label the horizontal intercept of each isocost line, and determine the slope of each line.
c. Can the firm produce 248,000 units of output for exactly $336?
d. What is the minimum cost for which 248,000 units of output can be produced?
e. Suppose the firm is spending exactly $240 to make 248,000 units of output. If the marginal product of labor is 400 units of output, what must the marginal product of capital be?

Transcribed Image Text:

Capital (K) 10 Q 248,000 Labor (L)