In the isoquant/isocost diagram (Figure 1), suppose the firm is producing 1,000 units of output at point

Question:

In the isoquant/isocost diagram (Figure 1), suppose the firm is producing 1,000 units of output at point A using 100 units of labor and 200 units of capital. As an outside consultant, what actions would you suggest to management to improve profits? What would you recommend if the firm were operating at point B, using 100 units of capital and 200 units of labor?

Data from Figure 1

image text in transcribed