Question: Suppose a competitive firm's long-run production function can be represented by Q = f (K,E) and a total cost function by C = rK +

  1. Suppose a competitive firm's long-run production function can be represented by Q = f (K,E) and a total cost function by C = rK + wE. Using isoquants and isocost curves show that the cost-minimizing combination of K and E must satisfy the following condition:

MPE / MPK = w/r or (MPE / w) = (MPK / r)

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