Question 2 Suppose that w = $5, r = $10 and your budget as the manager of a firm is C = $200 For all cases below, draw first the original isocost and then the new isocost (after the changes). In each diagram, clearly specify the x-intercept, the y-intercept and the slope for the new isocost and the old isocost. a. Suppose that your budget increases by $20; there is a "buy-one-get-one free" promotion on capital and the wage rate decreases by 20%. b. Suppose that if you pay a fee of $20, you get a "buy-one-get-one-free" promotion on capital. Suppose you also get 2 free unit of labor.

Question 2 Suppose that w = $5, r = $10 and your budget as the manager of a firm is C = $200 For all cases below, draw first the original isocost and then the new isocost (after the changes). In each diagram, clearly specify the x-intercept, the y-intercept and the slope for the new isocost and the old isocost. a. Suppose that your budget increases by $20; there is a "buy-one-get-one free" promotion on capital and the wage rate decreases by 20%. b. Suppose that if you pay a fee of $20, you get a "buy-one-get-one-free" promotion on capital. Suppose you also get 2 free unit of labor.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter29: Resource Markets

Section: Chapter Questions

Problem 3E

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