Question

Production Function: Y = AK^{x} L^{1-x} = (100)
K^{1/2} L^{1/2}

Find the minimum cost technique and total equilibrium output when the following hold:

TC = 18$ : p_{k} = 1 $/K : w^{0} = 3 $/L

and the minimum cost technique and total equilibrium output when the wage decreases:

TC = 18$ : p_{k} = 1 $/K : w^{t} = 2 $/L

Including the chosen technique, show 2 different techniques on each respective isoquanT

Answer #1

Let the Production Function be of the Cobb Douglas form:
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