Question
In the following graph we see the iso-cost of a business which has 1800 ? available for hiring the inputs of production L and K.
In the following graph we see the iso-cost of a business which has 1800 ? available for hiring the inputs of production L and K. We also know that the marginal rate of technical substitution between capital and labor is MRSLK=K/L.
With these data the business is at equilibrium when it uses:
A) 300 units of labor and 150 units of capital. B) 150 units of labor and 300 units of capital. C) 200 units of labor and 200 units of capital. D) 150 units of labor and 600 units of capital.
Select the correct answer from above and document sufficiently your answer with detailed calculations.
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