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as the picture Question 5 (15 marks) Suppose that the labor wage to increases. Assume that the rm's isoquants are stan dard, i.e., they.F satisfy

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Question 5 (15 marks) Suppose that the labor wage to increases. Assume that the rm's isoquants are stan dard, i.e., they.F satisfy average is better than extreme and has no kinks. Using a diagram, show that the long-run conditional demand for capital (i.e. it solves the cost minimization problem) of a rm must increase as a result of this wage increase. Hint: Draw the isoquant and isocost lines

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