Problem
Suppose the per unit prices of capital and labor are $20 and $10 respectively, derive the isoquant and isocost. What will be the optimal combination of labor and capital? Show and explain what will happen if the per unit price of labor goes up to $20 (have to show the changes in isocost and isoquant, and discuss the substitution effect). What are the average products of labor and capital?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.