1. Given the following data on four different isoquants. Please answer the following questions. (The graph provides the isoquants for these observations).

Total Production
	I	II	III	IV
Combination	L	K	L	K	L	K	L	K
A	3	14	4	14	5.5	15	8	16
B	2	10	3	11	5	12	7	12.5
C	3	6	4	8	5.5	9	8	9
D	4	4.5	5	6.3	6	8.3	9	7.3
E	5	3.5	6	5	7	7	10	6.4
F	6	3	7	4.4	8	6	11	7
H	7	2.7	8	4	9	5.6
G	8	3	9	4.4	10	6

• Differentiate between the Marginal Product of Labor and the Marginal Rate of Technical Substitution of L for K (MPL and MRTSLK)
• Suppose the price of capital is $1 per unit while the price of labor is $2 per unit and the budget for this producer is $12 per time period and is all spent on capital and labor. Draw the isocost line for this producer on the graph below.
• Find and label the point geometrically where this producer is in equilibrium. Why is this an equilibrium point?
• What can be said of the slope of the isocost and the isoquant at equilibrium?
• Would this firm produce at point A on isoquant Il? Why or why not?
• What if this producer's total costs *Change from $12 to $16 and then to $20. Please derive the firm's expansion path.
• What does a firm's expansion path illustrate?
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