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B11. Suppose a firm produces output using only labour and a natural resource. Suppose there is a new technology that allows the firm to produce

B11.

Suppose a firm produces output using only labour and a natural resource.

Suppose there is a new

technology that allows the firm to produce a higher level of output for every combination of labour and the

natural resource.

a.

On a diagram draw how the new technology will affect the isoquants for producing a particular level

of output.

[2 marks

Answer: New isoquant should be closer to the origin

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