Problem
(Choice of Input Combinations) Suppose that a firm's cost per unit of labor is $100 per day and its cost per unit of capital is $400 per day.
a. Draw the isocost line for a total cost per day of $2,000. Label the axes.
b. If the firm is producing efficiently, what is the marginal rate of technical substitution between labor and capital?
c. Demonstrate your answer to part (b) using isocost lines and isoquant curves.
d. (The Expansion Path) How are the expansion path and the long-run average cost curve related?
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.