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Capital A D Oo C Labor 2. (5 points) B AB is the original (starting) isocost line. AC is the new (changed) isocost line. Qo

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Capital A D Oo C Labor 2. (5 points) B AB is the original (starting) isocost line. AC is the new (changed) isocost line. Qo is the isoquant. D is the original tangency point (cost minimization point for output Qo). (a) Is price of capital rising or falling or unchanged when the isocost line moves from AB to AC? Please explain. (b) Please draw an isoquant and show the new tangency point between the new isocost line AC and an isoquant that would indicate the new equilibrium point for this firm. (c) As a result of the price change, does output fall or rise? Please explain

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