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Carmaker produces small cars. As production emits pollution, Carmaker needs to buy pollution permits. It also needs to hire labour. Carmaker's production function is given
Carmaker produces small cars. As production emits pollution, Carmaker needs to buy pollution permits. It also needs to hire labour. Carmaker's production function is given by: (1) q = min {0.05L, Em}, where E denotes the number of pollution permits, L denotes the amount of labour and min{a,b} denotes the minimum function where min{a,b} = a if a s b and min {a,b} = b if a 2 b. (a) [1 mark] Draw the isoquant corresponding to q = 10 in a clearly labelled diagram where L is in the x-axis and E is in the y-axis. Label two pairs of E and L in the diagram which give q = 10
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