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Suppose that wage (w) is $24 and rental price of capital (r) is $8. What is...

Suppose that wage (w) is $24 and rental price of capital (r) is $8. What is the long-run expansion path for a Cobb-Douglas production function ?

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Answer #1

* The expansion path gives the efficient (least-cost) input combinations for every level of output. The expansion path is derived for a specific set of input prices. Along an expansion path, the input-price ratio is constant and equal to the marginal rate of technical substitution.

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