Compound consolidated corporation (CCC) produces containers using two inputs: labor and glue. If labor cost 10.00 per hours and glue costs 5.00 per gallon, draw CCC's budget line for a total expenditure of 100,000. In this same diagram, sketch a production indifference curve indicating that CCC can produce no more than 1,000 containers with this expenditure.
With respect to Test Yourself Question 1, suppose that wages rise to $20 per hour and glue prices rise to $6 per gallon. How are CCC's optimal input proportions likely to change? (Use a diagram to explain your answer)